The blue chip FTSE 100 index was down 0.6 percent at 7,406.39 points by 0936 GMT, while mid caps peers traded 0.3 percent lower as well.

Heavyweight oil firms BP and Royal Dutch Shell both fell around 0.8, with the sector taking 8 points off the index as the price of oil continued to tumble.

"Oil has fallen back to levels not seen since mid-November 2016, and traders are worried it could bring about low inflation and diminished growth," David Madden, market analyst at CMC Markets UK, said.

Lenders Barclays and Lloyds were also among the biggest fallers, down 1.6 percent and 1.3 percent respectively as cyclical stocks came under pressure.

United Utilities was the biggest faller, dropping more than 4 percent as its shares traded without entitlement to their latest dividend payout.

Shares in bruised Provident Financial were up 3.6 percent, recovering a fraction of their heavy 17.6 percent loss in the previous session after the subprime lender had issued a profit warning.

Risers were otherwise fairly defensive, with health stock Shire up over 2 percent after the European Medicines Agency (EMA) validated its Veyvondi drug which prevents bleeding.

Safe-haven precious metals miners Fresnillo and Randgold were also in demand as the price of gold rose.

Outside of the blue chips, small cap constituent Imagination Technologies jumped as much as 21 percent after putting itself up for sale.

The tech firm has struggled ever since Apple, its biggest customer, said in April that it would develop its own graphics chips, sending its shares more than 60 percent lower in the immediate aftermath.

"Without Apple we are not convinced of the long term viability of the business model," analysts at N+1 Singer said in a note.

"The stock remains firmly in special situation territory, but given the likelihood of an offer emerging we move our recommendation to 'Hold'."