By Rebekah Curtis

LONDON (Reuters) - The FTSE 100 index slid into the red on the last trading day of the quarter on Friday, as a profit margin drop hit Vodafone, and economic worries gnawed at investors ahead of a key rate decision next week.

Vodafone (VOD.L: Quote, Profile, Research) slid 4.3 percent, its biggest daily fall in a year, after the mobile phone operator unveiled lower-than-expected margins in its crowded home market as it slashed tariffs to win customers and warned of challenges across Europe.

The FTSE 100 .FTSE ended down 16.2 points, or 0.26 percent, at 6,308, having gained 1.4 percent in the last quarter.

"We've ended the quarter more or less where we started it. We haven't made an awful lot of progress," said Mike Lenhoff, chief strategist at Brewin Dolphin.

"You've got a market that doesn't want to move decisively one way or the other," he added. "It's quite happy to tread water."

Strategists also cited investors' nervousness about the outlook for UK interest rates ahead of the Bank of England's decision on borrowing costs next Thursday.

Oil shares also dragged the market lower, despite U.S. crude oil prices CLc1 holding around $66 a barrel amid escalating tensions between Britain and Iran over the detention of 15 British sailors, as well as a strike in France.

BP (BP.L: Quote, Profile, Research) was off 1 percent, while rival Royal Dutch Shell (RDSa.L: Quote, Profile, Research) dipped 1.1 percent and BG Group (BG.L: Quote, Profile, Research) lost 0.5 percent. The sector was the second biggest loser in the index.