A 2.6% drop in Brent crude oil prices to $45.70 per barrel dragged on the FTSE 100 as it hit oil giants BP (BP.) and Royal Dutch Shell (RDSB).
BP declined 2.6% to 460.2p and Shell slipped 2.3% to £21.25.
Weaker metal prices further weighed on the blue-chip index as miners were among the biggest casualties.
Copper plummeted 1.3% to $5,643 per tonne and gold ticked 0.3% down to $1,240 per ounce.
Antofagasta (ANTO), BHP Billiton (BLT) and Glencore (GLEN) dropped by up to 4.7%.
The pound continued its downward trajectory and fell 0.7% against the euro following the Bank of England governor Mark Carney's warning that wage growth is falling and the Brexit impact was unclear.
As a result, he said it was not the right time for interest rate hikes.
Carney's comments contributed to widespread weakness in the banking sector. Lloyds (LLOY) fell 2.4% to 67p and HSBC (HSBA) retreated 0.5% to 688.3p.
The FTSE 100 closed 0.4% lower at 7,492.
Weaker oil prices weighed on energy stocks and dragged US equities lower on Tuesday. The S&P 500 fell 0.2% to 2,446.
FTSE 100 RISERS AND FALLERS
High street bank Barclays (BARC) was charged with fraud by the Serious Fraud Office in a case linked to Qatar. Barclays was 1.9% lower at 202.8p.
Investors failed to warm to heating products supplier Wolseley's (WOS) latest results as weak growth in the UK concerned investors. The market overlooked a 6.6% rise in like-for-like sales growth as the stock was flat at £48.83.
FTSE 250 RISERS AND FALLERS
Pizza delivery company Domino's (DOM) suffered a 6.5% slump in its share price to 295p following a downbeat note from Investec. The research argued that Domino's faced several challenges such as rising competition, increased discounting and a weak consumer environment, prompting a 'sell' recommendation.
Tullow Oil (TLW) slid 4.8% to 150.6p after chief financial officer Ian Springett resigned from the board due to ill health.
A contract win failed to rally shares in defence business Ultra Electronics (ULE). The company announced an $18m contract for an undisclosed major surveillance and security system but the stock was only up 1% to £20.75.
SMALL CAP RISERS AND FALLERS
Fashion retailer N Brown Group (BWNG) was in the spotlight as sales from ladies wear rose by 13.5% on a year-on-year basis. Shares in the company rallied 7.4% to 306p.
Elsewhere in the support services sector, Interserve (IRV) won a £265m contract extension with the UK Armed Forces, although it was met with a muted response as the stock retreated 0.2% to 237.7p.