Banks were under pressure as the FTSE drifted lower by midday on Monday in low volumes, with RBS weaker as investors digested a report into its near-collapse in 2008, and on disappointment surrounding the Europe summit.
London's blue chips fell 25.05 points, or 0.5 percent to 5,504.16 by 12:08 p.m. BT, having closed 0.8 percent higher on Friday.
Majority-state-owned British lender Royal Bank of Scotland shed 5.0 percent, with the sector the main drag on a weak FTSE 100, as the Financial Services Authority (FSA) reported into the near-collapse of the bank in 2008.
Seymour Pierce analyst Bruce Packard, who has a reduce rating on RBS, said he did not think the report alters the investment case, instead he said the implications for the report might be wider in terms of changes to the regulatory system.
Broader worries over the economy kept investors risk appetite at bay, as analysts said Friday's summit in Europe failed to address the market's concerns and left questions unanswered.
There are no details on any of the key issues - just lots of promises. And historically follow-through has disappointed, Credit Suisse said in a note.
Standard and Poor's rating agency, which placed 15 euro zone countries on watch for a potential downgrade ahead of the summit, said the European Union will need more summits to resolve its debt turmoil and time is running out.
Twenty-six European Union leaders -- all except Britain's -- agreed on Friday to pursue stricter budget rules for the single currency area and also to have euro zone states and others provide up to 200 billion euros in bilateral loans to the International Monetary Fund (IMF) to help tackle the crisis.
IMF chief economist Olivier Blanchard said at the weekend that the agreement for deeper economic integration was a step in the right direction but not a complete solution for the crisis.
UK mining shares recoiled, with worries about Europe more than offsetting strong copper import data from China.
Our economists believe the sovereign debt and banking crises are causing a renewed recession in the Euro Area. Metals seem to have been on 'pause' for a week or two, following earlier substantial volatility, Jon Bergtheil, analyst at Citigroup said.
This is not always a good sign because, if the fundamentals were strong, we would have expected 'bottom fishing' to have created a stronger bounce off the base.
ENRC dropped 4.9 percent after a weekend news report citing talks with Britain's Serious Fraud Office on corruption allegations revived concerns over coporate governance at the FTSE 100 Kazakh miner.
Elsewhere, Inmarsat shed 5.2 percent, as traders cite media reports that the wireless service run by its partner LightSquared caused interference to 75 percent of global-positioning system receivers examined in a U.S. government test.
Charles Stanley analyst Tom Gidley-Kitchin said the problems raised concerns over Lightsquared meeting its contractual obligations to Inmarsat.
There's the question of whether Lightsquared will make all the payments it is contractually required to make if everything goes wrong, he said.
On the upside, defensive stocks led the gainers as investors looked for safer havens to protect their returns, with drugmaker GlaxoSmithKline and Imperial Tobacco each rising 1.4 percent, and SSE 1.2 percent higher.
Also weighing on the UK index were U.S. stock index futures, which pointed to a weaker open for equities on Wall Street on Monday.
Across the Atlantic November's Federal budget is due at 1900 GMT, with the week's main focus to be on the outcome of the latest Federal Reserve Open Market Committee (FOMC) meeting, due after the London market close on Tuesday at 7:15 p.m. BT.