Banks led the fall in the top share index on Wednesday morning after Standard & Poor's cut its ratings on 15 major lenders.

The cuts, following an overhaul by S&P to improve its products and repair its reputation, came at a time when the market for banks' debt is on edge because of the euro zone crisis.

(S&P) had flagged such changes were imminent but the scale of the moves have dampened the mood for now, Jim Reid, strategist at Deutsche Bank said.

HSBC , Barclays , LLoyds and RBS fell up to 2 percent.

S&P's cuts came after Moody's ratings agency warned on Monday it would soon downgrade subordinated debt of 87 banks across 15 European Union nations on concerns that governments would be too cash-strapped to bail out holders of the riskier securities.

Worries over the health of the banking sector <.FTNMX8350>, in particular the strength of their balance sheets given their exposure to Europe's raging debt crisis, has seen UK-listed banks fall more than 30 percent in 2011.

UBS, in an outlook for 2012, reiterated its cautious stance on global banks because of uncertainties over economic growth, a possible re-escalation in the EU sovereign crisis, concerns over contagion and regulation and funding and deleveraging risks.

The eurozone crisis appears to be moving towards full-blown contagion with stresses now evident across the sovereign bond market in Europe, the bank said.

The UK's FTSE 100 <.FTSE> was down 43.46 points, or 0.8 percent at 5,293.54 by 0847 GMT on the last trading day of the month. The index is down 4.5 percent so far in November.

Traders said there was the potential for losses to be reversed as fund managers put a gloss on their portfolios heading into the month end. But it was hard to find too many positives given the macro economic backdrop.

SAFETY FIRST

In a flight to safety, investors switched funds out of risky equities into safer havens such as UK, U.S. and German government bonds, while bond yields in countries gripped by debt anxiety - Italy and Spain in particular - remained unsustainably high.

The threat of contagion forced euro zone ministers to agree to ramp up the firepower of their rescue fund but the detail fell short of investors' expectations.

As investors went into risk off mode, commodity stocks echoed banks by weighing heavily on the index.

Oil explorer Cairn Energy fell 5.7 percent as it said two wells it drilled in Greenland and which it hoped would open up a new frontier in oil exploration, were being plugged and abandoned.

British engineer, AMEC , which has customers in the oil and gas and mining sectors, fell 2.5 percent as HSBC cut it target price to 1,280 pence from 1,350 pence.

On the upside, Drugmakers GlaxoSmithKline and Shire each rose 0.9 percent as investors hunted for protection from the economic storm engulfing the global economy.

British software firm Sage was one of the only non-defensive stocks on the risers' list, up 1.0 percent as the firm posted a 8 percent rise in full-year profit.

The was no major domestic macro economic data due out on Wednesday.