The FTSE 100 Index shrank back from the 4600 barrier today as it failed to recover from the early shock of a profits warning from Unilever.
Traders piled out of drinks groups and consumer products stocks after Unilever said weak sales of ice cream and iced tea had put margins under pressure.
An afternoon rally led by oil giants BP and Shell was not enough to lift the Footsie into positive territory as it closed 11.5 points lower at 4579.5.
Market morale received little support from across the Atlantic, where the Dow Jones Industrial Average retreated nearly 60 points in early trading.
US investors appeared happy to sit on their hands ahead of tomorrow’s interest rate decision by the Federal Reserve, with a quarter-point rise likely.
Oil prices were again proving a headache as they climbed above the $46 a barrel mark in New York, continuing the momentum of Friday when they rose by 4%.
In London, frozen food-to-Dove soap group Unilever said third-quarter margins would be below expectations after a wet summer dampened demand for ice cream and iced tea.
Its shares ended at the top of the FTSE 100 fallers with a 22.5p slip to 459.5p – dragging down household products group Reckitt Benckiser in the process.
Reckitt issued a statement confirming that it remained on track to meet its guidance for full-year revenues growth, but its shares still fell 21p to 1411p.
Drinks giant Allied Domecq was another to suffer in the wake of Unilever’s announcement, down 6.25p to 458.25p, and Cadbury Schweppes was 4.5p cheaper at 432.5p.
The other top flight company to report today, Imperial Tobacco, started positively but retreated to stand 1p off at 1201p after reporting positive UK performances by its cigarette and roll-your-own tobacco brands.
Oil stocks were doing their best to prop up the market on the back of higher crude prices, with BP at the top of the Footsie risers, advancing 9p to 528.5p.
Shell added 5p to 422.5p, but rival Cairn Energy fell 10p to 1515p on its first day in the Footsie.
Supermarket chain Morrisons was off – down 2.25p to 200p – after selling 10 stores to Tesco in its latest move to slim down the former Safeway empire.
Meanwhile, shares in radio groups GWR and Capital were getting in tune after they announced they were in merger talks.
GWR moved more than 9% higher, or 24.5p to 287p while Capital lifted nearly 7%, or 28p to 458p.
And pharmaceuticals group Warner Chilcott took off after it said it had received a takeover approach from a consortium of private equity houses. Shares were up 15% or 99p at 747p.
The biggest risers in the Footsie today were BP up 9p to 528.5p, Shell adding 5p to 422.5p, William Hill up 6p to 551p and Hilton Group adding 2.25p to 284.75p.
The heaviest fallers were Unilever off 22.5p to 459.5p, Smith & Nephew falling 12p to 484p, Boots Group off 16.5p to 679.5p and ICI falling 5p to 211.5p.