The blue-chip FTSE 100 equity index <.FTSE> was down 0.5 percent at 6,792.63 points going into the close of the trading session, near its lowest level in around a week.
Royal Dutch Shell dropped 4.7 percent, the worst-performing FTSE 100 stock in percentage terms after its earnings miss. The company also announced a $15 billion cut in spending due to the slump in oil prices.
Oil has fallen almost 60 percent since June due to economic weakness, low global demand and a boom in U.S. shale production.
John Smith, senior fund manager at Brown Shipley, said Shell's update had disappointed, and the fall in the company's share price also knocked its rival BP (>> BP plc), which fell 2.6 percent.
"Earnings estimates look far too high. The real impact of the decline in the oil price will be felt on this year’s earnings, and the dividend will remain under pressure if oil prices do not see a significant recovery soon," he said.
Globally, stock markets were also subdued after the Federal Reserve said late on Wednesday that the U.S. economy was expanding "at a solid pace" with strong job gains.
Investors interpreted the comments as a sign that the U.S. central bank remained on track to raise interest rates this year.
Higher interest rates, which increase the returns on offer from fixed income assets, can often push stock markets lower. A higher U.S. interest rate would also push up the value of the dollar and commodities, which are typically priced in dollars.
"Expectations for higher U.S. rates are underwriting a higher dollar, a clear headwind for commodity prices," said Keith Bowman, equity analyst at Hargreaves Lansdown.
(Additional reporting by Sudip Kar-Gupta; Editing by Hugh Lawson and John Stonestreet)
By Atul Prakash
