The FTSE 100 Index ended the day down 19.6 points at 5073.8.
The fall came despite shares in mining firms rocketing ahead as gold prices soared above $300 an ounce barrier.
Anglo American rose 3%, up 37p to £12.31, BHP Billiton gained 8p to 398p and Rio Tinto added 43p to £14.38, while Lonmin rose 28p to £10.65.
Faith in shares was hurt by the latest corporate scandal to rock the financial world as Allied Irish Banks revealed this morning that, along with the FBI, it was probing a suspected fraud involving more than £500 million in a US subsidiary.
Among the banking stocks heading south were Royal Bank of Scotland off 35p at £17.57, Barclays dropping 35p at £21.19, Lloyds TSB 10p weaker at 726½p, HBOS off 5p at 769½p and Abbey National easing 29p at £10.32.
Shares in AIB, which has its primary listing in Dublin, were down 2.35 euros at 11.50 euros - a fall of 17%.
Elsewhere, telecom stocks were adding to the downbeat trend as economic worries continued to concern investors.
Vodafone slid 6¾p at 136½p and mmO2 - which yesterday unveiled a swathe of job cuts - fell 2p at 70½p.
Among the smaller stocks, nuts and bolts manufacturer Trifast slumped 30½p at 82p - a 27% fall - after warning flat sales in US and Europe would hit profits and put jobs at risk.
Internet firm InterX said full-year results would be substantially below expectations, and shares slid 73%, off 49½p at 18p.
And sports event management group Sports Resource saw shares slide 21%, off 13p to 47½p, after warning profits would fall below expectations following weaker market conditions.
Office provider Regus unveiled deals worth more than €29m and shares surged 10%, up 3p to 33p.