State-backed Lloyds Banking Group was the biggest top-flight faller despite a surge in first-half profits after bumping up its bill for payment protection insurance (PPI) mis-selling to £13.4 billion.
Shares fell three per cent as the wider FTSE 100 Index built on a run of gains earlier in the week, up 27.4 points at 6696.3.
The top-flight was ahead despite falling heavyweight mining stocks, which have endured a turbulent period amid tumbling commodity prices and fears over a slowdown in China, the world's second biggest economy.
But with the month coming to a close, the index finished well ahead of its closing position in June of 6521, after a volatile July when traders' nerves were shredded over Greece's debt crisis before it reached agreement with creditors.
The spotlight fell on Athens again today as talks between the country and the European Union and International Monetary Fund (IMF) got underway - amid doubts about the IMF's participation.
It said it could not take part in the rescue until the country and its creditors made tough decisions on economic reforms and debt relief.
European markets gave a mixed response, as they also reacted to figures showing unemployment and inflation stable in the single currency zone. Germany's Dax and France's Cac 40 were both ahead.
The pound fell by a cent against the euro at just under 1.42 while it was also a little lower against the US dollar at just over 1.56.
In corporate news, Lloyds reported a 38 per cent rise in pre-tax profits to £1.19 billion for the first half.
But the group set aside an additional £1.8 billion for conduct charges including a £1.4 billion for payment protection insurance (PPI) mis-selling.
It took the bank's total bill for the PPI scandal to £13.4 billion. Lloyds expects complaints to tail off but said that should they not it could face additional hits totalling £3 billion by the end of next year. Shares fell 2.8p to 83.2p.
Engine maker Rolls-Royce was the biggest riser in the top flight jumping six per cent, or 44.5p, to 794p, after activist hedge fund ValueAct Capital Management became the largest investor in the firm with at 5.4 per cent stake.
The fallers' board was dominated by commodity stocks, with miner Antofagasta down two per cent, or 13.5p to 567p, while Glencore dropped 8p to 534p.
Broadcaster ITV was a strong riser on the announcement that US cable giant Liberty Global had increased its stake in the group.
The stock rose more than three per cent, or 9.1p to 280.7p, after Liberty - controlled by businessman John Malone - said it has upped its holding to 9.9 per cent.
The biggest risers on the FTSE 100 Index were Rolls-Royce up 44.5p at 794p, Carnival up 176p at 3552p, ITV up 9.1p at 280.7p and Persimmon up 61p at 2047p.
The biggest fallers on the FTSE 100 Index were Lloyds Banking Group down 2.8p at 83.2p, Antofagasta 13.5p at 567p, Intercontinental Hotels Group down 45p at 2698p and Glencore down 8p at 534p.
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