The blue-chip FTSE <.FTSE> index fell 0.3 percent, with HSBC (>> HSBC Holdings plc) down 6.5 percent, its worst day in 18 months, after its results. The bank has a more than 6 percent weighting on the index.
HSBC announced a 62 percent slump in profits for 2016, worse than analysts were expecting, due to writedowns from restructuring.
"The group flagged multiple headwinds (totalling $3 billion) for 2017. We believe the key question is to what extent the group will be able to offset these through volume growth," said Goldman Sachs analysts in a note.
HSBC shares had rallied 70 percent from April 2016 to Monday's close.
Financial services company Hargreaves Lansdown (>> Hargreaves Lansdown PLC) and Standard Chartered Bank (>> Standard Chartered PLC) tracked HSBC lower. Hargreaves Lansdown was also smarting from a downgrade to "underperform" by Bernstein.
The FTSE 350 banking index <.FTNMX8350> was down 3.9 percent, its worst day since the Brexit referendum aftermath at the end of June 2016. Lloyds, Barclays, RBS and Standard Chartered will post full-year results in the coming days.
"It will be interesting to see how the other banks perform, because HSBC might have a competitive advantage because of its Asia focus and diversification," said Ipek Ozkardeskaya of LCG Capital.
Mediclinic (>> Mediclinic International PLC) was down 6 percent after the South African private healthcare provider said it expected a drop in revenue and margins at its Middle East business.
Miners Anglo American (>> Anglo American plc) and Fresnillo (>> Fresnillo Plc) were also weaker, despite a solid results update from the former.
Anglo American posted a 25 percent profit increase and said it would resume dividends by the end of 2017. It had cut net debt to $8.5 billion, and said it would sell further assets only to sharpen its focus, rather than because it needed the money.
"We are encouraged by free cash flow, deleveraging and diamonds. However, near term we are concerned Anglo is vulnerable to negative spot price momentum and South Africa headwinds," wrote UBS analyst Myles Allsop in a note.
The stock was down 0.9 percent. Announcing a wind-down of asset sales could be raising investors' concerns about the strength of Anglo's balance sheet, Ozkardeskaya said.
Rolls-Royce (>> Rolls-Royce Holding PLC) rose 3.5 percent, maintaining Monday's momentum after a Goldman Sachs upgrade to "buy". Educational publisher Sage Group (>> The Sage Group plc) was also a top gainer, up 2.3 percent after Stifel started coverage on the stock with a "buy" rating.
Oil services company Wood Group (>> John Wood Group PLC) was the worst performer on the mid-cap FTSE 250 index <.FTMC>, down 7.9 percent and scoring its biggest one-day drop since July 2011, after it posted a 62 percent fall in full-year profit, missing market estimates, citing a challenging oil and gas market.
(Reporting by Helen Reid; additional reporting by Danilo Masoni; Editing by Mark Trevelyan)
By Helen Reid
Stocks treated in this article : BHP Billiton plc
, Persimmon plc
, Standard Chartered PLC
, John Wood Group PLC
, Rolls-Royce Holding PLC
, Hargreaves Lansdown PLC
, Anglo American plc
, Capita PLC
, Fresnillo Plc
, BHP Billiton Limited
, WH Smith Plc
, The Sage Group plc
, Mediclinic International PLC
, HSBC Holdings plc