The main index, which hit a near six-month high in the previous session, gave up 0.3%. BAT weighed the most, while Shell and BP weakened despite a jump in crude prices.
UK-exposed banks including Lloyds and RBS were lower, as expectations that the BoE will ease policy this month continue to rise.
But homebuilders Persimmon, Barratt and Berkeley advanced about 2% each. Lower interest rates make it easier for consumers to take out mortgages to buy houses.
The FTSE 250 was 0.2% lower, with Capita dropping 4.2% after UBS downgraded the stock. Separately, a media report https://www.telegraph.co.uk/business/2020/01/18/capita-targets-profit-growth-200m-non-core-sell-off on Saturday said the company was planning a 200-million-pound sale of a clutch of units.
Also weighing on sentiment were comments from UK finance minister Sajid Javid that Britain would not commit to sticking to European Union rules in post-Brexit trade talks.
Still, both benchmark indexes avoided any major shocks as overall trading volume remained thin, with U.S. markets closed for the Martin Luther King Jr. holiday.
"Traders in this part of the world are mostly sitting on the fence... Trading ranges have been low and there hasn't been much in terms of news flow in Europe to grab traders' attention," CMC Markets analyst David Madden said.
Though sharp moves were scant, Fevertree sank 27% on its worst day ever after warning that annual revenue growth would be below its expectations following subdued trading over Christmas.
"Falling sales in the UK will inevitably spark fears the gin boom has turned to bust," Hargreaves Lansdown analyst Nicholas Hyett said.
Intu Properties, which shed more than 70% in value last year amid a string of bankruptcies on Britain's High Street, ended 1% lower after saying it was targeting an equity raise.
Its shares had earlier tumbled as much as 10% to a record low, while those of peer Hammerson gave up 3.7%.
Defence company BAE Systems outperformed the blue-chips with a 3.7% gain after saying it would buy two units being offloaded due to the merger of U.S. rivals Raytheon and United Technologies.
(Reporting by Shashwat Awasthi in Bengaluru; Editing by Anil D'Silva and Andrew Heavens)
By Shashwat Awasthi