Shares in Standard Chartered tumbled into the red as the bank said it would cut 15,000 jobs and announced a multibillion-dollar investor cash call after swinging to a third quarter loss.
The Asian-focused bank saw shares drop almost seven per cent after posting a pre-tax loss of $139 million (£90m), compared with profits of $1.5 billion a year earlier.
The wider FTSE 100 Index struggled for direction for a second day in a row, lifting 21.8 points to 6383.6, with Standard the biggest faller as its new boss Bill Winters admitted the results were "disappointing".
The bank, which saw shares fall 47.6p to 666p, is tapping investors for $5.1 billion under a rights issue to shore up its balance sheet, while also exiting some businesses as part of a radical restructure.
In Germany, the widening Volkswagen emissions crisis saw the Dax fall 0.2 per cent after Porsche and Audi cars were also dragged into the scandal. France's Cac 40 was flat.
Sentiment in London was also held back after the latest survey from the UK construction sector showed activity slipped slightly in October from a six-month high in September, although the figures suggested building activity was helping bolster wider UK growth in the final quarter.
The pound was slightly down against the US dollar at 1.54 in light of the construction data, while it was up a cent against the euro at just under 1.41.
Royal Dutch Shell and BG Group were strong risers in the top flight after the oil firm said its £43bn merger with the gas giant was on track to complete in early 2016.
Shell also upgraded its annual cost savings target for the deal to $3.5bn (£2.3b) from $2.5bn (£1.6bn) previously.
Shell lifted 50p to 1764p, while BG Group rose 27.5p to 1056.5p.
Insurance giant Direct Line Group was another top flight riser after it said a strong motor performance helped overall gross written premiums rise by 3.1 per cent in the third quarter to £844.5 million, with a 1.3 per cent rise over the first nine months of the year to £2.4 billion.
Shares were up 3.3p to 394.8p.
Housebuilders were suffering contrasting fortunes after a gloomy sector note from Liberum, which slapped a "sell" recommendation on Barratt Developments, Persimmon and Taylor Wimpey, saying their valuations were "too optimistic".
Barratt Developments fell almost four per cent or 23.5p to 586.5p in the FTSE 100, followed by Taylor Wimpey, off 10.5p at 187.7p, while Persimmon dropped 47p to 1921p.
Their FTSE 250 counterparts were also sent reeling, with Redrow the worst impacted in the second tier, down 28.7p to 442.5p.
The biggest risers in the FTSE 100 Index were Meggitt up 16p at 373.1p, BP up 15p at 403.3p, Glencore up 3.9p at 119.5p and Anglo American up 17.6p at 561.9p.
The biggest fallers in the FTSE 100 were Standard Chartered down 47.6p at 666p, Taylor Wimpey down 10.5p at 187.7p, Barratt Developments down 23.5p at 586.5p and Shire down 165p at 4720p.
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