Britain's leading share index was 0.2 percent lower by midsession on Friday, falling for a second session with banks pressured by persisting anxiety over Dubai's debt default and oil majors weak with the crude price.
At 1157 GMT, the FTSE 100 .FTSE was down 10.17 points at 5,183.96, having tumbled 3.2 percent on Thursday, its biggest one-day drop in eight months.
Banks were the biggest drag amid concerns over the health of the global financial system after Dubai on Wednesday sought a debt standstill for state-owned Dubai World.
Global heavyweight HSBC (HSBA.L) shed 1.5 percent, while emerging markets-focused Standard Chartered (STAN.L) dropped 2.7 percent as investors fretted over possible exposure to Dubai.
But Barclays (BARC.L) and Royal Bank of Scotland (RBS.L) rallied 1.1 and 2.8 percent higher, respectively, as some traders thought that Thursday's sharp falls were overdone.
The Dubai concerns are an issue but not a real shock. It's more a question of timing with the lack of market participants due to the U.S. Thanksgiving holiday yesterday and the Muslim Eid holiday today exaggerating the moves, said Mic Mills, senior trader at ETX Capital.
Investors were also selling stock across the board yesterday to raise cash to take up Lloyds Banking Group's record rights issue, so this also drained liquidity, said Mills.
Lloyds shares (LLOY.L) dropped 3.3 percent as they traded ex-rights on Friday following overwhelming investor support for the bank's 13.5 billion pound cash call.
The index is down around 1.6 percent this week but has gained 2.5 percent this month and is still up 49 percent since touching a six-year low in March.
Energy issues were mostly lower as crude prices CLc1 fell nearly 5 percent, with BP (BP.L) and Royal Dutch Shell (RDSa.L) off 0.2 percent and 0.2 percent respectively, although BG Group (BG.L) added 0.3 percent.
Heavyweight pharma stocks were weak, with AstraZeneca (AZN.L) and GlaxoSmithKline (GSK.L) down 0.5 and 0.8 percent, respectively.
Retail issues eased, led by Home Retail Group (HOME.L), off 1.9 percent, and Next (NXT.L), down 1.6 percent as Goldman Sachs downgraded its rating of both in a major European sector review.
Electricals retailers Kesa Electricals (KESA.L) and DSG International (DSGI.L) lost 5.6 and 2.7 percent respectively as Goldman also downgraded both mid cap stocks as well.
Luxury goods group Burberry (BRBY.L) added 1.9 percent after Goldman raised its rating to neutral from sell.
Miners were the top performing sector, helped by bargain-hunters after sharp falls on Thursday although metal prices remained weak. Xstrata (XTA.L) and Rio Tinto (RIO.L) stood out, up 2.3 and 2.5 percent.
Life insurers also recovered from falls on Thursday, with Prudential (PRU.L), Legal & General (LGEN.L), Aviva (AV.L) and Resolution (RSL.L) up 1.7 to 2.2 percent.
Prudential was upgraded by Citigroup in a sector review on Thursday but failed to react then.
Thomas Cook Group TCH.L was the top FTSE 100 riser, up 3.3 percent as investors looked ahead to the tour operator's full-year results due on Monday.
Peer TUI Travel (TT.L) added 1.3 percent with its results due next Tuesday. (Editing by David Cowell)