Healthcare and consumer staples sectors were hit as bond yields and sterling advanced, which offset gains in the oil sector.
The FTSE 100 dropped over 1% to 6,711.
Oil producers and the companies which service them flourished following OPEC's decision to curb output, which caused a 1% rise in the price of crude.
Hunting (HTG), Amec Foster Wheeler (AMFW) and Weir Group (WEIR) were some of the top FTSE 350 gainers.
Manufacturing in the UK slowed according to Markit's Purchasing Managers' Index, which fell from 54.2 in October to 53.4 in November.
Gold declined 0.3% to $1,167 per ounce and copper retreated 0.2% to $5,776 per tonne.
FTSE 100 RISERS AND FALLERS
Cruise liner Carnival (CCL) was among the bigger blue chip fallers, alongside other defensives including Severn Trent (SVT), Unilever (ULVR) and Imperial Brands (IMB).
Sterling strength played a role as it continued to rally at the start of December. Carnival, Unilever and Imperial suffered as they generate a substantial share of their profits abroad.
Rio Tinto (RIO) said it is co-operating with the Securities & Exchange Commission over an investigation around the timing of losses on a coal project in Mozambique.
FTSE 250 RISERS AND FALLERS
Airline Wizz Air's (WIZZ) costs will be heavily impacted by higher oil prices, but rose 3.6% due to a bullish call by analysts at investment bank Goldman Sachs with a 'buy' rating,
Broadband provider Talk Talk (TALK) traded 3% lower at 155p after a broker downgrade from JP Morgan Cazenove.
Outsourcer Serco (SRP) reported trading profit in 2016 is likely to be in line with expectations at £80m though profit might dip in 2017. Turnaround initiatives should return the business to top-line growth in 2018.
Progress was underlined with a £600m cleaning and domestic services contract with Barts Health NHS Trust, England's largest NHS trust.
SMALL CAP RISERS AND FALLERS
Mobile Streams (MOS) raised £1.6m to finance the company's growth and for marketing over the next financial year.
Formation (FRM) announced it will cancel its listing on AIM and apply to float on the ISDX growth market, causing a share price crash of 41.7%.
Recruiter InterQuest (ITQ) disappointed investors after announcing a restructure of its digital division following lower than expected work volumes. The stock fell 11%.
Fulcrum Utility Services (FCRM) sealed a £4m contract to build a gas pipeline for a food manufacturer in the south-west of England.
Premier Asset Management (PAM) reported its first set of results since joining the junior market in October and delivered a 22% increase in assets under management to £5.1bn.