Weakness in Vodafone and falls in mining and tobacco firms dragged down the FTSE 100 on Wednesday, outweighing gains in financials as the market paused following a recent run-up.
By 11:28 a.m. British time, London's benchmark index <.FTSE> was down 27.81 points or 0.5 percent at 5,836.97, fluctuating in a tight range between 5,800 and 5,900, albeit in anaemic volumes.
The index has risen around 6 percent since late July, when pledges by European Central Bank (ECB) chief Mario Draghi to do "whatever it takes" to protect the euro from Europe's sovereign debt crisis boosted equity markets around the world.
"It is a quiet day today with a lot of markets shut and investors digesting a mixed bag of economic data from Tuesday, which makes the thinking over further easing from central banks muddled and the market just needs some direction one way or another," Neil Marsh, strategist at NewEdge, said.
Marsh said if easing is forthcoming he expected there were further gains to be had despite equity indexes nearing 2012 highs, but he does not expect a sell-off if it does not happen as it will mean the economic outlook is improving.
Vodafone shed 1.0 percent, accounting for around 4 points, or nearly 14 percent of the FTSE 100 index's retreat, as BofA Merrill Lynch downgraded its rating for the mobile telecoms group to "neutral" from "buy", partly on valuation grounds.
Stocks trading ex-dividend accounted for 11.86 points of the FTSE 100's decline and included miners Rio Tinto , Anglo American , and Vedanta Resources , and tobacco firm British American Tobacco (BAT) .
BAT and Imperial Tobacco , down 1.8 percent, were also hit after Australia's highest court on Wednesday dismissed a challenge from international cigarette companies over tough new anti-tobacco marketing laws.
Oriel Securities said the ruling would have an immediate impact as the BAT generates up to 10 percent of its operating profit in Australia.
Miners <.FTNMX1770> were the worst-performing sector as worries lingered over global demand.
London-listed Kazakh miner ENRC , down 6.2 percent, became the latest firm to raise concerns of earnings in the sector as lower production and weak prices in its key steelmaking commodities dragged first-half profit down 41 percent. It also cut its spending and dividend.
On the upside, Resolution rose 4.8 percent as investors welcomed strategic changes being made by the British insurance acquisition specialist, which accompanied solid first-half results.
"The statement is dominated by the change to strategy rather than the figures per se. Resolution abandons any plans for further acquisitions, instead choosing to maximise cash emergence and value, and the company will no longer seek a specific exit event," Oriel Securities said.
Asia-focused banking group Standard Chartered added 4.6 percent after it agreed to pay a $340 million fine over transactions linked to Iran, removing the threat of losing its New York state banking licence.
StanChart shares are still down nearly 10 percent from their close on August 3, the session before the New York banking regulator threatened to strip it of its state banking licence.
"While the settlement with the DFS may not be the final word on the sanctions violations allegations & possible additional fines, with the New York banking license still in place, we think that the most material issues are likely resolved," said BofA Merrill Lynch, which upgraded its rating on Standard Chartered to "buy" from "neutral".
(Editing by Hugh Lawson)