The FTSE is down over a percentage point in afternoon trading with better-than-expected growth figures failing to lift investors as concerns over the banking sector weigh on sentiment.
Lower-than-expected results for UBS, down 4% at one stage, coupled with a warning from Bank governor Mervyn King that Basel III rules might not prevent another financial crisis combined to dampen confidence after figures showed the UK grew 0.8% in Q3.
Shortly after 15.30, the FTSE was down 1.09%, or 62 points, to 5,689. Poor US housing data showing home prices accelerated their decline in August also added to the negative sentiment.
Despite initially starting off well, most banks are down except Lloyds which is up 0.5%. RBS and HSBC are both over a percentage point in the red.
Leading the losers is Cairn Energy after it failed to find a commercial discovery off Greenland. ARM Holdings is down nearly 7%, despite posting a 34% increase in revenues with analysts saying the stock is over-priced.
Eurasian Natural Resources, down more than 3%, also features among the day's poor performers.
The insurance sector has also been hit after a Bank of America Merrill Lynch downgrade. Old Mutual is down nearly 3%.
This negative mood was felt across the Atlantic, with the Dow down 0.18% to 11,144 shortly after opening. But the financial sector is holding sway, with Bank of America the morning's top performer, up 1.7%, and American Express also up over a percentage point.
Across Europe, France's Cac 40 is down 0.6% and Germany's Dax down nearly 0.55.
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