The blue-chip FTSE 100 index was down 0.4%, with bank stocks including HSBC Holdings, Barclays and Prudential Financial Inc falling between 0.9% and 1.7%.
Mining stocks including Rio Tinto, Anglo American , Glencore and BHP were also among the laggards.
“We had Credit Suisse saying this morning ‘we are going to suffer losses’ and it’s potentially a matter of time until more companies come out and say the same,” said Connor Campbell, an analyst at Spreadex.
“I think there is a certain air of restlessness around the markets this morning because the situation with Archegos Capital is unclear and that’s feeding into the negative sentiment.”
Nomura and Credit Suisse both flagged significant losses following transactions with an unnamed U.S. client, although both announcements came after Archegos Capital Management roiled financial markets on Friday with a number of significant block trades.
A raft of global stimulus has helped the FTSE 100 recover more than 37% from a coronavirus-driven crash last year, but a recent rise in COVID-19 cases across Europe has dampened investor sentiment.
Prime Minister Boris Johnson urged Britons to be cautious as a stay-at-home order and some other lockdown measures ended, citing rising cases in other parts of Europe and the threat posed by new variants of the virus.
The domestically focused mid-cap FTSE 250 index slipped 0.1%, dragged down by industrials stocks.
Online car seller Cazoo Holdings Ltd said it had agreed to go public in New York through a merger with AJAX I Acquisition Corp, a blank-check acquisition company led by billionaire U.S. investor Dan Och.
Food delivery company Deliveroo has seen investor demand for its initial public offering exceed the full deal size, setting the stage for London’s biggest IPO in a decade.