Travel and leisure stocks were impacted by the downturn in sentiment – although some firms which have broadly benefited from Covid, such as health, saw stocks take a much-needed boost.
The FTSE 100 closed 32.39 points, or 0.45%, lower at 7,223.57 on Friday.
Michael Hewson, chief market analyst at CMC Markets said: “After four days of declines it finally looked like the FTSE 100 might finish the week on the up, but unfortunately the news flow from Europe had other ideas, after Austria imposed another lockdown as well as mandating compulsory vaccine uptake for its population from February 1.
“With Germany also imposing new restrictions, any thoughts that the vaccines would offer a way to a more normal Christmas period appear to have gone up in smoke for now, in Europe at least, although there is a nagging fear this could ripple out across the region.
“Markets haven’t reacted well to today’s news and while the declines are moderate, we are after all still within all-time highs for the Dax and Cac40, we’ve seen the travel and leisure sector get a renewed clobbering.”
The German Dax decreased by 0.29% and the French Cac dropped by 0.34%.
Across the Atlantic, the US markets were more mixed with the Dow dipping again but investors bought into the tech-focused Nasdaq.
Meanwhile, sterling continued its strong week to push 0.11% higher versus the US dollar at 1.347, and increase 0.1% against the euro at 1.190.
In company news, Ocado was easily the strongest performer on the FTSE 100 after it was buoyed by a note from Deutsche Bank raising the possibility that Marks & Spencer could look to buy the other 50% of its retail joint venture with Ocado.
Shares in the online retail firm lifted by 121.5p to 1,897.5p as it will have also been supported by the re-imposition of pandemic restrictions in some countries.
Elsewhere, fintech firm Mode sank in value as it handed back significant gains from an announcement on Thursday telling shareholders it was partnering with retailers including Boots and Ocado.
However, its shares fell by 5p to 35p after it clarified on Friday morning that certain brands it agreed deals with through affiliates have “since withdrawn” after Boots and Ocado both denied any involvement with Mode.
Unilever shares nudged higher after the consumer group agreed a £3.8 billion deal to sell its tea brands, including PG Tips and Pukka, to private equity firm CVC, after trading closed on Thursday.
Shares moved 26p higher to 3,849p.
The price of oil hit its lowest since October 1 over the concerns that pandemic restrictions in Europe could hit fuel demand in the travel sector.
Brent crude dropped by 3.5% to 78.4 dollars per barrel when the London markets closed.
The biggest risers on the FTSE 100 were Ocado, up 121.5p at 1,897.5p, Royal Mail, up 17.8p at 498.5p, Rightmove, up 21.6p at 763.6p, Segro, up 37.5p at 1,402p.
The biggest fallers were Compass, down 81.5p at 1,479.5p, Melrose, down 7.35p at 159.45p, Kingfisher, down 14.7p at 322.5p, and Rolls-Royce, down 5.48p at 136p.