The FTSE 100 fell 0.75 per cent to 4,405.22 as banking stocks slumped, with Lloyds Banking Group leading the decline.
Lloyds Banking stock fell by 7.7 per cent after placing shares not taken up by existing investors.
Royal Bank of Scotland also saw shares fall, by 4.85 per cent.
British Airways was also trading lower, down by 3.67 per cent, after trade body IATA warned the airline industry could lose $9 billion this year.
Tim Hughes, head of sales trading for IG Index, said: “The FTSE 100 has been stuck in its current range for around a month now.
“Although the calm may come as a relief to some compared to how the market was lurching around in the first few months of the year, right now all it seems to be doing is encouraging more investors to sit on the sidelines waiting for further clues as to where we are headed next.”
In the US, the Dow Jones was off 1.45 per cent in early trading, while the S&P 500 dropped by 1.27 per cent.
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