Britain's top share index fell 0.9 percent at midday on Wednesday, with miners weighed by an uncertain demand outlook in China, and banks weaker after Q4 results from Bank of America disappointed investors.
By 1214 GMT the FTSE 100 was down 50.79 points at 5,462.35 having closed up 18.75 points, or 0.3 percent, on Thursday at 5,513.14.
Sources in China said authorities had instructed major banks to stop lending for the rest of January after they went on a lending binge earlier in the month, sending stocks in the region sharply lower.
Commodity prices weakened as the move clouded the demand outlook, which hit miners. Rio Tinto, Xstrata, Lonmin, Anglo American, Kazakhmys and BHP Billiton fell 3.2-4.6 percent.
Fourth-quarter numbers from Bank of America did little to calm investors' nerves, with recent results from Citigroup and JP Morgan having already disappointed.
Morgan Stanley is due to report later in the session.
"The China story is in the market, but we have had mixed numbers on financials and that's injecting some volatility into the market," said Peter Dixon, economist at Commerzbank. "There are question marks over earnings numbers in 2010."
HSBC, Barclays, Standard Chartered, Royal Bank of Scotland and Lloyds Banking Group fell 0.2-2.1 percent.
Among individual fallers, Imperial Tobacco was the top blue-chip loser, down 3.3 percent after the stock went ex-dividend on Wednesday, taking 2.05 points off the FTSE 100 index.
PHARMAS STRONGER
Pharmaceuticals stocks were the main support for the index, after a Republican win in the U.S. Senate race in Massachusetts robbed Democrats of the crucial 60th Senate vote needed to pass healthcare reform.
"The odds of major U.S. healthcare reform, or something that's not to the Republicans liking, is now looking less than 50 percent — and that's going to help the pharmaceutical companies," said Jefferies analyst Jeffrey Holford.
AstraZeneca and GlaxoSmithKline added 0.6 percent and 1 percent respectively, while Shire topped the list of FTSE risers, gaining 3.2 percent, also boosted by an upgrade to 'overweight' from 'neutral' by JP Morgan.
Some other defensive stocks fared well, with United Utilities, and Severn Trent gaining 2 and 1.2 percent respectively.
Cable & Wireless was a strong performer, gaining 2.1 percent after Citigroup upgraded its rating for the telecoms carrier to "buy" from "hold".
The number of Britons claiming jobless benefit fell by more than expected in December and by the biggest amount since April 2007, data showed.
All nine members of the Bank of England's Monetary Policy Committee voted in January to keep interest rates at a record low of 0.5 percent and to maintain its 200 billion pound ($326.5 billion) quantitative easing scheme as expected.
Confederation of British Industry director general Richard Lambert said on Wednesday the best outlook for the country's economy was a fragile recovery this year that extended into 2011, in a Financial Times interview.
