The Royal Bank of Scotland led the London market lower as the bank slumped more than 6% after deepening its losses in the first quarter.
The FTSE 100 Index was down 80.5 points to 6241.9 points, as RBS reported a pre-tax loss of £968 million - more than double last year's figure of £446 million.
Travel stocks also kept the market firmly in the red, with investors taking flight from British Airways' owner International Airlines Group (IAG) despite it boosting profits on the back of its takeover of Irish flag-carrier Aer Lingus.
IAG was more than 4% down as it said March sales were affected by the Brussels' attacks and the timing of Easter, adding that it has also seen softer underlying demand for its key business and first-class seats.
It said as a result the firm would "moderate its short-term capacity growth plans".
Across Europe, Germany's Dax fell 2.7% and the Cac 40 in France dropped 2.8%, as the eurozone picked up by a better-than-expected 0.6% for the first quarter, but saw deflation return at minus 0.2% in April, compared with zero in March.
The pound was marginally up against the dollar at 1.461, as US consumer spending only managed to step up 0.1% last month after a 0.2% rise in February.
However, sterling was 0.6% down against the euro at 1.278.
The price of oil tracked back from 2016 highs after a Reuters' survey showed oil cartel Opec's output rose in April. Brent crude was down 1.4% to 47.09 US dollars a barrel.
In stocks, RBS was the biggest faller, dropping 14.8p to 230p, as the bank said its loss reflected the impact of its £1.2 billion payment last month to the Treasury to buy out a crucial part of its £45 billion bailout.
On Thursday, RBS warned of a greater-than-expected hit from plans to spin off its Williams & Glyn arm.
IAG said its operating profit jumped more than five times to 155 million euro (£121 million) in the three months to the end of March compared with a year ago, despite the effects of the Brussels' terror attacks.
But shares fell more than 4%, or 26p, to 525p as investors remained wary over the outlook for the airline industry.
Budget airline easyJet was 42p lower at 1473p and travel operator TUI fell 33p to 991p.
The Restaurant Group slumped more than 26%, or 99.2p, to 275.1p, after it said it expects lower 2016 profits, due to challenging trading conditions, adding that chief executive Stephen Critoph would leave the business with immediate effect.
The firm, which owns the Chiquito and Frankie & Benny's chains, said that since its last update a month ago it has seen "a further deterioration in trading conditions".
It now says it expects full-year sales to be between 2.5% and 5% lower, which will see annual profit come in at between £74 million to £80 million.
Education group Pearson slipped 9.5p to 805p as it said it was making "good progress" with its turnaround plan as revenues slipped in the first quarter.
The firm said lower assessment revenues across the US and UK caused continuing sales to fall 4%, while headline sales fell 6% after the strength of the dollar against the pound helped offset a weaker performance from the emerging markets.
The biggest risers in the FTSE 100 Index were Glencore up 6.5p to 162.9p, Randgold Resources up 245p to 6770p, BT Group up 8.9p to 443.2p, Shire up 74p to 4261p.
The biggest fallers were Royal Bank of Scotland down 14.8p to 230p, IAG down 26p to 525p, Rolls-Royce down 24.5p to 669.5p, Whitbread down 140p to 3872p.
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