Miners were also weaker along with metal prices. BHP Billiton , Rio Tinto , Anglo American , Kazakhmys , Xstrata , Antofagasta and Vedanta Resources lost 1.4 to 3.9 percent.

"There is still concern over the U.S. economic situation and how that might impact on the UK. Clearly, we’ve still got some ongoing fall-out from the credit crunch," said Richard Hunter, head of UK equities at Hargreaves Lansdown.

"It’s quite difficult to see where a short-term positive catalyst might come from," Hunter said, adding that investors would likely look to U.S. second-quarter earnings for further market direction.

Investors will also be keeping a keen eye on a slew of U.S. economic data, including personal consumption expenditure for April, Chicago PMI for May and the University of Michigan sentiment report, due later in the day for further clues on the state of the U.S. economy.

Banks rebounded after a recent battering but analysts still expected the sector to remain under pressure from a credit crisis.

Moody’s Investors Service warned UK banks may face further pressure on their debt ratings this year as the credit crisis continues, although most institutions can manage the downturn at current rating levels.

HBOS also said it would be well into next year before the wholesale funding markets returned to normality and the credit crunch eased for customers, the Financial Times said.

Barclays , Royal Bank of Scotland , Alliance & Leicester , Lloyds TSB and HSBC added between 0.9 and 3.2 percent.

BT Group put on 2.4 percent. Britain’s communications regulator has announced a review of the prices that BT can charge rivals to use its network in the light of significant increases in competition in the market.

"There is no real appetite, it seems, in the UK to go long on sectors which are struggling," said Peter Dixon, UK economist at Commerzbank. "Miners are losing a bit of momentum today but that’s just a temporary phenomenon."

(Editing by Paul Bolding)