The main index fell by 1.4% to levels not seen since mid-December and the FTSE 250 slid 0.9%, as a modest rebound that the indexes had managed over the last two sessions unravelled.

Countries have begun isolating hundreds of citizens evacuated from the Chinese city of Wuhan to stop the virus from spreading, and the World Health Organization may on Thursday reassess its stance on the outbreak.

"Fears of a pandemic may be over-egging the pudding, but there is again a clear risk-off mood in the market," Markets.com analyst Neil Wilson said.

The FTSE 100 has shed nearly 4% since last week when news of the coronavirus flare-up first emerged.

"Expect to see further declines and more volatility in risk assets in the coming days. Investors who were waiting for the dips to buy may need to wait a little longer," FXTM analyst Han Tan said.

News that England's central bank chose not to cut interest rates at Governor Mark Carney's final policy meeting lifted sterling and in turn accelerated losses for dollar earners.

"Carney ended up giving the pound a goodbye kiss rather than kick, the Bank of England voting to keep interest rates unchanged, booting any potential cut into the Andrew Bailey era," Spreadex analyst Connor Campbell wrote.

The biggest drag to the blue-chip bourse came from Shell, which slid 4.4% to its lowest level since July 2017 after fourth-quarter profit halved and the oil major cut the pace of its $25 billion share buyback programme.

Weaker crude prices also weighed on shares of Shell and peer BP, as oil stocks made up more than half of the blue-chip bourse's losses. [O/R]

Telecom firm BT slumped 8% on its worst day in three years after it reported a steeper-than-expected drop in quarterly revenue and said Britain's decision to limit Huawei's [HWT.UL] role in building 5G and fibre networks would bump up costs.

Around midday, travel group Carnival's UK-listed stock stumbled as much as 11% to a three-low year after news of potential coronavirus infection on one of its cruise ships. Shares ended down 5.1%.

Outperforming the main index was Unilever, which added 2% after the consumer goods company launched a strategic review of its tea business.

Midcap Avast dropped 13.5%, bringing weekly losses to about 30%, after saying it would shutter its data analytics business following reports of data privacy concerns.

By Shashwat Awasthi and Muvija M