The Footsie slumped into the red as banking giant Barclays agreed to settle a case brought by regulators over allegations that the bank "misled" investors who used its "dark pool" share trading system.
The US Securities and Exchange Commission and the New York Attorney General's Office said the bank had admitted wrongdoing and agreed to pay each agency 35 million dollars (£24.5 million).
The FTSE 100 Index began the week by falling 23.7 points to 6060.1, amid disappointing factory output data from the US and China, the two largest economies in the world respectively.
In the US production shrank in January for the fourth straight month, while in China last month official data showed that factory output fell to its lowest level in more than three years.
Traders were also downbeat as oil tumbled, with Brent Crude losing more than one US dollar to fall below 34 US dollars a barrel, darkening prospects for world trade.
Germany's DAX was down 0.5%, while the Cac 40 in France also fell 0.7%. In New York, the Dow Jones Industrial Average was down slightly in early trading.
Trustnet Direct market analyst Tony Cross said: "Any hope that equity markets would start February with a spring in their step has been scuppered as crude oil prices have resumed their downward trajectory."
The pound was a cent up against the US dollar at just below 1.44, after Markit/CIPS manufacturing purchasing managers' index showed that UK factory output rose to a three-month high of 52.9 in January from 52.1 in December, beating forecasts of 51.6.
Sterling was also a cent up against the euro at 1.32.
In stocks, BT was a strong riser, up 2% or 9.4p to 494.2p as it saw pre-tax profits surge by nearly a quarter and ruled out scrapping the EE brand following its takeover of the mobile operator.
The telecoms giant said its results were ahead of expectations as it bolstered reported pre-tax profits by 24% to £862 million in the third quarter to the end of December.
Barclays was down 3.2p to 182.8p after its settlement.
Other banks fell on the news including Lloyds Banking Group down 1.3p to 64.2p and Royal Bank of Scotland, which was 3.6p lower to 249.1p.
Budget airline easyJet - which reported last week that revenues had been hit by terrorist attacks in Paris and Egypt - saw shares jump more than 3%, or 53p to 1601p, on the back of a strong update from its rival Ryanair.
Ryanair passenger numbers rose by a fifth as it cut prices to boost bookings in the wake of recent terrorist attacks in Brussels and Paris.
The carrier's decision to drive down fares in the face of weakening demand sparked a 20% rise in traffic to 24.9 million in the third quarter.
British Airways owner International Airlines group also lifted almost 3%, or 15.5p to 555p.
The biggest risers in the FTSE 100 Index were easyJet, up 53p at 1601p, International Airlines group, up 15.5p at 555p, Fresnillo, up 17p at 739p, and InterContinental, up 48p at 2345p.
The biggest fallers in the FTSE 100 Index were Prudential, down 41p at 1326.5p, BP, down 9.2p at 367p, Standard Chartered, down 11p at 460p, and Lloyds Banking Group, down at 1.3p at 64.2p.
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