The FTSE 100 Index clung on above the 4800 mark today as negative sentiment towards blue-chip shares spilled over to the UK from Wall Street.
The sight of oil giant BP being downgraded added to the gloom in the trading ring as the Footsie closed 17.5 points lower at 4800.8 – its third reverse in a row.
BP weakened 1% or 5p to 512.5p after Morgan Stanley said its share price already reflected high expectations for its future performance.
Major rival Shell was also in negative territory after the price of light crude weakened on news of another sharp rise in US inventories of gasoline.
Shell was 2p lower at 445.5p even though Morgan Stanley said perceptions of the company could improve this year. However, Cairn Energy bucked the trend in the sector with a 14p rise to 1155p.
Traders watched as US shares failed to rebound in the wake of the 90-point fall yesterday, which was driven largely by poor results in the banking sector and from online auctioneer eBay.
In spite of data today showing further growth in the US economy, the Dow Jones Industrial Average continued to give up ground as it fell as much as 40 points after opening.
The heaviest faller in London was brewer SABMiller, after it was reported to be the front-runner to take control of Colombian company Grupo Empresarial Bavaria. The stock fell 3%, off 21.5p to 809p.
Other losers included a string of media stocks, with Reuters off 7p to 388.25p, FT owner Pearson down 10.5p to 609.5p and ITV retreating 1.25p to 114p.
Retailer Boots was in the black, rising 9.5p to 671.5p, as investors continued to warm to yesterday’s trading update. Marks & Spencer also lifted 6.75p to 355.75p and Dixons advanced 1p to 160.75p.
Insurer Legal & General was 0.25p lower at 114p.25 despite reporting new business figures at the top end of market hopes. The news failed to inspire investors in rival Royal & Sun Alliance, which was the third heaviest faller with a drop of 1.75p to 84.5p.
Corporate news was mainly dominated by firms outside the top flight, including Laura Ashley, which slipped 4% or half a penny to 11.25p after revealing difficult trading in the home furnishings sector had contributed to a further sales slump.
Electricals group Kesa was up 5.75p at 309.75p after reporting strong demand for multimedia and digital products over Christmas, despite sales growth slowing at flagship chain Comet.
And quarrying-to-concrete group Aggregate Industries faded 0.5p to 139.25p after saying it had agreed to a 138p a share takeover offer from the world’s second biggest cement maker, Holcim.
The day’s biggest winners were Wolseley, up 28p to 1070p, Emap advancing 19.5p to 854.5p, Shire Pharmaceuticals lifting 14p to 632.5p and Marks & Spencer adding 6.75p to 355.75p.
Largest losers were SABmiller, down 21.5p to 809p, Old Mutual off 2.75p to 126.25p, Royal & Sun Alliance dipping 1.75p to 84.5p and ICI retreating 4.75p to 236.5p.