Poor sentiment towards banks and oil companies ended a six-day run of gains by the FTSE 100 Index yesterday .
The Footsie ended the session 16.8 points down at 5315.5 after investors pulled out of oil stocks and reacted coolly to interim results from the Royal Bank of Scotland.
The index also failed to find any upside from the Bank of England's move to lower interest rates to 4.5 per cent, which traders had already factored into the market.
An afternoon rise in the price of US light crude to nearly $62 a barrel came too late to lift BP, Royal Dutch Shell and BG Group, which declined after Wednesday's betterthanexpected US oil stockpile data.
BP lost a penny to 642p while Shell B shares were down 13p to 1851p and BG Group was off 2p at 4881/4p.
However, the rising oil price helped to slash the Dow Jones by 65 points shortly after London's close.
Nervousness ahead of today's US consumer confidence figures also had a negative impact on the market.
RBS was one of the heaviest losers despite posting a 14 per cent hike in half-year profits to £3.69 billion.
Analysts said the results were below the consensus forecast and expressed concern at the performance of its UK retail division, sending shares four per cent lower, off 75p to 1628p.
A string of other banks followed RBS lower, with Barclays weakening 3p to 559p as investors awaited its results tomorrow. Lloyds TSB slipped 21/2p to 4851/2p but HBOS bucked the trend to lift 8p to 887p.
Amvescap joined the banks and oil majors in pulling the Footsie down after Canadian fund manager CI Financial withdrew its unsolicited offer for the investment group. Shares were at the top of the fallers, slipping 11 per cent or 463/4p to 3691/4p.
In contrast, ICI and consumer products group Unilever proved to be the biggest risers, gaining nearly ten per cent and four per cent respectively as the City picked up on signs of resilience in the face of tough conditions.
ICI lifted 261/4p to 2961/2p as it stuck by guidance for a satisfactory year and said it had experienced some improvement in trading towards the end of its second quarter.
Unilever followed it after posting lower profits, but saying it had stabilised market share.
Shares were 21p higher at 572p. Biggest risers were: ICI up 261/4p to 2961/2p, Unilever gaining 21p to 572p, BSkyB climbing 18p to 562p and International Power lifting 43/4p to 2201/2p.
Largest fallers included Amvescap down 463/4p to 3691/4p, Royal Bank of Scotland off 75p to 1628p, Smiths Group losing 211/2p to 9031/2p and Smith & Nephew retreating 121/2p to 532p.