The FTSE 100 index was down 0.5% and was set for its second straight week of losses. HSBC Holdings and Prudential were also among the biggest drags on the index with declines of 1.2% and 2.2%, respectively.
The domestically focussed mid-cap FTSE 250 index also lost 0.5%, as data showed a gauge of confidence among British consumers slipped back in January because of worries sparked by widespread lockdowns.
Prime Minister Boris Johnson said on Thursday it was still too early to say when the national lockdown in England would end.
"The idea of business restrictions and the lockdown stretching for six months seems to have spooked the UK market," said Connor Campbell, financial analyst at Spreadex.
The FTSE 100 has recorded consistent monthly gains since November, supported by hopes of a vaccine-led recovery, but it has recently underperformed its U.S. and European peers, which have been lifted by hopes of more U.S. stimulus.
Data on Friday showed British retailers struggled to recover in December from a lockdown the previous month, marking a weak end to their worst year on record.
Oil heavyweights BP and Royal Dutch Shell tracked a slide in oil prices that fell on worries that new pandemic restrictions in China would curb fuel demand. [O/R]
In company news, fashion retailer Next lost 1.7%, after it pulled out of the bidding for brands owned by British tycoon Philip Green's Arcadia Group as it was unable to meet the price expectations of the collapsed fashion chain.
Shares of British IT services company Computacenter rose 1.7% as it posted a jump in 2020 revenue, leading to an upbeat profit forecast.
(Reporting by Shivani Kumaresan in Bengaluru; Editing by Rashmi Aich and Shailesh Kuber)
By Shivani Kumaresan
