The blue-chip FTSE 100 was 0.2% lower, while the domestically focussed mid-cap index lost 0.4%.
Airline stocks Wizz Air, EasyJet and British Airways-owner IAG fell more than 2% each, after British Prime Minister Boris Johnson imposed tougher COVID-19 restrictions in England on Wednesday.
"Every indication so far is that Omicron is not as harmful as some of the other variants. It just spreads more quickly," said Danni Hewson, financial analyst at AJ Bell.
"The travel sector is being hammered ... people are looking at it and thinking anything connected with travel is going to be impacted."
Market participants are now awaiting a policy meeting from the Bank of England, with expectations that the central bank will wait until early next year before raising borrowing costs, later than previously expected.
"There may be some marginal benefit in waiting for new information on the Omicron variant, including its impact on infections, hospitalisations and vaccine efficacy," said Sanjay Raja, senior economist at Deutsche Bank.
Transport company FirstGroup fell 5.7% after warning of uncertainty in its recovery pace because of new restrictions imposed in England, with passenger numbers on its buses slipping in recent weeks.
Rolls-Royce declined 3.4% and was at the bottom of the blue-chips index on fears that a drop in air travel could hit its business that makes and maintains aircraft engines.
Drugmaker AstraZeneca rose 0.9% after U.S. health regulators authorized the use of its antibody cocktail to prevent COVID-19 infections.
Cardboard maker DS Smith gained 1.2% after posting an 80% surge in first-half profit and declaring a higher interim dividend.
Infrastructure company Balfour Beatty gained 2.3% after doubling its revenue in the first half of 2021.
(Reporting by Bansari Mayur Kamdar and Shreyashi Sanyal in Bengaluru; Editing by Anil D'Silva and Lisa Shumaker)
By Bansari Mayur Kamdar and Shreyashi Sanyal