Lloyds Banking Group shares fell after the Government postponed the sale of its final stake in the lender.
Chancellor George Osborne said he would not give the green light to the sale until turbulence in global markets had subsided, sending the lender’s shares down as much as 2% at one stage.
The FTSE 100 Index was 58.6 points lower at 5931.8 amid ongoing volatility in global markets that has seen top flight shares in London fall by some 7% since the start of the year.
Germany’s DAX fell by more than 2% and the Cac 40 in France was more than 1% lower. In New York the Dow Jones Industrial was down slightly in early trading.
The pound was two cents up against the US dollar at just under 1.44 after official figures showed that the UK economy grew at a faster pace in the fourth quarter of 2015, at 0.5% against 0.4% in the previous three months.
The Office for National Statistics added that expansion over 2015 as a whole eased back to 2.2% from 2.9% in 2014.
Sterling was a cent up against the euro at just over 1.31.
Traders were also weighing up comments by the US Federal Reserve which held rates and said it was “closely monitoring” global economic conditions.
The central bank said US economic growth had slowed as exports fell because of the strengthening dollar.
However, traders cheered Brent crude lifting above 34 US dollars a barrel, on hopes that Russia, Saudi Arabia and other Opec nations were close to talks about cutting production to stem oversupply.
In stocks, Royal Dutch Shell and BP were both higher as oil prices rose, up 34p to 1496p and 5.6p to 368.5p respectively.
Lloyds Banking Group was down 0.9p at 64.1p, and Barclays was 3.4p lower at 178.4p.
Energy giant SSE said it will cut its standard gas prices by 5.3% in the latest move by a Big Six supplier to reduce tariffs.
The group said the reduction will take effect on March 29 and will save household gas customers on average £32 a year.
Shares fell 8p to 1424p.
Rival British Gas owner Centrica was down almost 5%, or 9.9p at 200.2p.
Elsewhere, transport giant FirstGroup slumped 12%, or 12.3p to 90.1p, after the FTSE 250 firm warned over annual profits after bad weather and flooding at the end of last year hit its bus business.
The Aberdeen-based group said its third quarter results were impacted by the extreme flooding across Cumbria and the north of England, while its First Student school bus division in the United States suffered a driver shortage.
The biggest risers on the FTSE 100 Index were Anglo American up 22.2p at 275.9p, Tesco up 5.2p at 166.2p, Royal Dutch Shell up 34p at 1496p, Antofagasta up 8.6p at 384p.
The biggest fallers on the FTSE 100 Index were Ashtead down 75p at 890p, Carnival down 232p at 3384p, International Airlines Group down 27p at 525.5p and Centrica down 9.9p at 200.2p.