The London market ended Tuesday on a low note despite a positive start to the day on Wall Street.
The FTSE 100 Index compounded earlier losses to close 12.7 points down at 5201.5.
US stocks rose after computing group IBM and stockbroker Merrill Lynch reported quarterly profits that exceeded analysts’ estimates. Intel, the biggest computer chip maker, and Yahoo, owner of the most visited internet site, also advanced ahead of quarterly results.
After ending Monday in negative territory due to bad news from the banking sector, the Dow Jones Industrial Average lifted 59 points shortly after London’s close.
UK banks were still feeling the pinch from yesterday’s below-expectations second quarter profit update from Citigroup.
The news hit many of the biggest names in the sector, with Royal Bank of Scotland the biggest victim, fading 1% or 18p to 1723p, while Lloyds TSB was 4.25p down at 485.25p, HBOS was 6.5p lower at 878p and Barclays retreated 4p to 564.5p.
However, investors in SABMiller were doing their best to lift the market after the brewing giant agreed a deal worth 7.8 billion US dollars (£4.48bn) for Colombian rival Bavaria.
SAB Miller was at the top of the Footsie risers, gaining more than 10% or 94p to 980p.
Some telecoms stocks were also making progress despite losses for FTSE 250 stock Virgin Mobile.
Virgin ended the day 0.25p lower at 245.75p after revealing a successful move into the fixed contract market, but saying its number of new customers had nearly halved in the first quarter.
Larger rival O2 climbed 0.25p to 136.5p after it said its O2 Airwave division had won a £390 million contract to provide communications for the UK’s ambulance services.
Cable & Wireless cheered 1.5p to 149p, but Vodafone dropped 0.25p to 141p and BT weakened 1% or 2.25p to 226.75p.
Outside the top flight, shares in Matalan surged 7% or 14p to 205p as speculation resurfaced that Asda owner Wal-Mart was lining up a takeover bid.
And shares in specialist salvage firm SubSea Resources climbed more than 3% or a penny to 29.75p as the prospect of recovering gold and silver bullion from a 19th century wreck in the Atlantic sparked a fresh wave of investment.
But a pre-close update from chocolate maker Thorntons failed to move its stock. Shares were unchanged at 135p after it said annual results should hit market hopes.
Semiconductor maker ARM Holdings drifted 4% or 5p to 115.5p after it forecasted lower than expected full year US dollar revenues following weakness in royalty income.
Meanwhile, shares in engineering group Invensys shot up 10% or 1.25p to 13.25p after it said it was selling its Lambda power supply business to Japanese conglomerate TDK.
Biggest risers were SABMiller up 94p to 980p, Scottish Power lifting 8.75p to 504p, Man Group gaining 27p to 1556p and Unilever putting on 8p to 563.5p.
Largest fallers included Alliance Unichem off 22.5p to 827.5p, DMGT down 14.5p to 654p, Yell sliding 9.5p to 442.75p and Morrisons losing 3.5p to 183p.