Traders highlighted some anxiety over growth from major metals consumer China ahead of official September PMI numbers, due out on Saturday Oct. 1.
Luxury goods firm Burberry , also highly leveraged to Chinese markets, was the biggest blue chip casualty, dropping 8.3 percent.
Burberry is also getting a bit of a pasting on the back of yesterday's poor UK retail sales numbers as well as concerns that a slowdown in China could well impact its margins, said Michael Hewson, market analyst at CMC Markets
The FTSE 100 index closed down 20.79 points, or 0.4 percent at 5,196.84, having dropped back from a peak of 5,250.18 in a choppy session.
There's an element of window-dressing and rebalancing after a very difficult and volatile third quarter, but there are still some huge macro issues out there that are far from being resolved so investors are staying nervous, said Henk Potts, markets strategist at Barclays Wealth.
The UK blue chip index has lost more than 12 percent in the third quarter, which ends on Friday, and is down over 11 percent in the year-to-date, having gained 9 percent in 2010.
Median forecasts of 22 equity strategists from a survey taken in the last 10 days indicated the FTSE 100 would trade at 5,275 by end-2011, close to current levels.
The results were lower than a poll in June which showed the FTSE ending 2011 at 6,150 and reaching 6,300 in mid-2012. For details, double-click on
U.S. blue chips were 1.6 percent higher by London's close, lifted by data showing better than expected U.S. weekly jobless claims and an upward revision to second-quarter GDP.
Wolseley was the top FTSE 100 gainer, up 6.6 percent, boosted by the above-forecast data, with the plumbing supplies firm highly exposed to the U.S. housing market.
However, gains were more modest for the tech-laden Nasdaq composite as chipmakers suffered after Advanced Micro Devices reduced its third-quarter outlook.
British chip designer ARM Holdings shed 3.2 percent.
British banks bounced back after falls on Wednesday, with Barclays and Royal Bank of Scotland both up 1.7 percent, helped by a vote by German lawmakers to give the euro zone's crisis fund (EFSF) new powers, easing concerns over the region's debt situation to which the sector is hugely exposed.
In the biggest test of German Chancellor Angela Merkel's leadership since she took power six years ago, 523 lawmakers backed more powers for the fund, 85 voted against and three abstained.
This is just a step in a very long journey to an (as yet) unknown destination. Seven more countries need to vote on this, and the Slovakia vote is not due until the end of October, said Louise Cooper, markets analyst at BGC Partners.
Among other blue chip gainers, British Airways and Iberia owner IAG took on 3.8 percent as JPMorgan Cazenove started coverage on the airline with an overweight stance.
Tate & Lyle added 2.9 percent as the sweeteners and starches maker said it sees a year of profitable growth, aided by demand for its zero-calorie sweetener Splenda.