Prospects for future demand from the United States - a key market for UK's export-focused blue chips - remained in doubt as the U.S. political battle to avoid the 'fiscal cliff' of some $600 billion in potentially crippling tax hikes and spending cuts continued.

Friday's data showing an unexpected fall in October U.S. industrial output underscored the problems faced by the world's biggest economy.

With the euro zone already back in recession, according to data released earlier this week, investors braced for further cuts to corporate profits and outlooks in coming months.

British buyout group Melrose Plc offered a taster of things to come, warning of uncertain 2013 sales outlook and sending its shares 11.5 percent lower.

Pennon was another top faller, off 4.4 percent, as the previous day's profit warning sparked a wave of analyst downgrades.

The FTSE 100 closed down 72.16 points, or 1.3 percent at 5,605.59 points, taking its weekly losses to 2.8 percent - their steepest since May.

My prognosis is the market is at fair value and the risk is that with slowing industrial production in the U.S., and capex orders coming off quite sharply, the upbeat message we had from U.S. in first nine months of the year seems to have stalled. The recession in Europe is a done deal, said Gerard Lane, strategists at Shore Capital.

So there is downside risks to annual forecasts... so I want to remain underweight on equities, he added.

To date, 39 percent of UK companies have missed earnings forecasts in the quarterly results season, compared to 30 percent of U.S. ones, according to Thomson Reuters Stamine.

The FTSE's outlook also darkened from a technical viewpoint, with the close at the day's low and the break below its September trough of 5,634.88 points, which has marked the bottom of the 300 point range held since the summer.