The FTSE 100 index lost 47.5 points, or 0.8%, to 5,881 points today, led by the banking sector.
HBOS declined 0.21% to 972.5p after it beat expectations with a 17% rise in pre-tax profits but said bad debts also soared.
The report dragged on the rest of the banking sector. Standard Chartered fell 1.92% to £13.28, Alliance & Leicester dropped 1.62% to £10.30 and Lloyds TSB declined 0.93% to 534p.
Kazakhmys finished down 0.16% at £12.49, despite pushing ahead at the start. The copper miner said it was still seeing strong levels of copper extraction in the latter stages of the first half.
Antofagasta also gave back gains, down 0.12% at 417.75p, despite announcing an increase in copper extraction during the second quarter compared with the first.
In the US, the Dow Jones Industrial Average has dropped 72 points, or 0.6%, to 11,113.64 points after inflation gauges tied to spending and manufacturing exceeded forecasts, renewing concern the Federal Reserve may raise interest rates next week.
Verizon has retreated 71 cents to $33.11 after it said second-quarter profit fell 24% to $1.61bn, or 55 cents a share.
Whole Foods has lost $5.75, or 10%, to $51.76. Fiscal third-quarter sales were $1.34bn, less than the $1.36bn estimated by analysts surveyed by Thomson.
Advanced Micro Devices has gained 17 cents to $19.55 on news Dell will begin selling notebook computers equipped with Advanced Micro chips as early as October.IFAonline
Irish border, resignations, market volatility and more
Revealed – successes across all 11 categories
Fidelity International multi-asset CIO James Bateman talks to Julian Marr about recent market volatility, portfolio positioning and his thoughts on the coming year
Follows Phil Young
‘Positive so far’