It had reached its highest level since May in the previous session, as sluggish US jobs data increased the likelihood of the America's central bank continuing its massive quantitative easing programme for some time to come.
But concerns over credit conditions tightening in China - after its banks tripled debt write-offs - punctured the mood, sending Asian markets sliding overnight. The worries helped drive the FTSE down 21.2 points to 6674.5.
Stock exchanges in Paris, Frankfurt and New York also fell. Meanwhile on the currency markets, the pound was hit by concerns expressed by Bank of England policymakers that its strength could hit exports.
Sterling lost one cent against the greenback, to 1.62 US dollars, while it dropped by a narrower margin against the single currency, to 1.17 euros.
In London, banks were among the stocks under pressure amid the lacklustre trading.
Royal Bank of Scotland fell nearly 3% or 9.9p to 352.1p as attention remained on the prospect of the institution being split up under the Government's imminent "bad bank" review. Barclays was 4.4p lower at 268.2p while HSBC dropped 9.4p to 678.3p.
Other notable fallers included BT after UBS downgraded the telecoms stock to sell on fears that the market for its new sport channels may not be as large as the company had expected. Shares fell 4.7p to 362.5p.
RSA Insurance topped the FTSE 100 risers board as takeover speculation returned to the stock, which was up 3.1p at 127p.
Housebuilder Persimmon was not far behind, up 29p to 1256p, after the British Bankers' Association reported the strongest month for mortgage approvals since 2009.
In company results, Home Retail Group rose 4% after it said half-year pre-tax profits rose 53% in £27.4 million, driven by early progress in the digital makeover of Argos and better trading at Homebase. Shares were 7.8p higher at 192.1p.
However, online fashion retailer ASOS slipped back despite a 23% rise in full-year profits and a pledge that it will meet its target for £1 billion sales by 2015. Shares, which have been on a steady upward path in recent months, fell 208p to 5205p.
Meanwhile bank note printer De La Rue slid 10%, or 95.5p to 885.5p, after its second profits warning in less than a year, as it said earnings for the year to the end of March will be about £90m, compared with a £100m operating profits target.
The biggest risers on the FTSE 100 were United Utilities up 11.5p to 716.5p and International Airlines Group up 5.8p to 364.8p.
The biggest fallers on the FTSE 100 were ARM Holdings down 50.5p to 953.5p, Antofagasta down 38.5p to 865.5p, Smiths Group down 58p to 1397p and Anglo American down 61p to 1495p.