The FTSE 100 index closed down 0.31 percent on the day at 6,456.9 in thin volumes and in a shortened session, before the market closes on Tuesday for New Year's Day.
Troubles in the U.S. subprime mortgages spilled over into the credit market earlier this year sapping liquidity and pushing major central banks to intervene to keep the wheels of the global economy running smoothly.
The DJ STOXX banking sector index ended the year nearly 17 percent lower -- its worst performance since 2002.
But rising commodity prices helped heavyweight oil and mining stocks to brave some worries that slowing global economic growth could dent appetite for commodities.
The base metal sector ended the year up around 28 percent while the oil sector closed 2007 up more than 7 percent.