Britain's blue chip shares gave up solid early gains to close flat on Tuesday although the telecoms and mining sectors held out, with Cable & Wireless up 1.9 percent after news it was to resume buying back its shares.
Mining giant Xstrata headed a resilient mining sector, rising 2.3 percent on speculation it might not proceed with a counter offer to Inco's C$12 billion bid for nickel miner Falconbridge, due to union opposition.
The main union at Inco and Falconbridge said late on Monday it would try to block a bid by Xstrata after a UK newspaper reported that Xstrata, which holds a 20 percent stake in Falconbridge, was expected to announce a bid in two weeks.
"There's a story they might bid for Falconbridge and that's dissipated a bit because the unions said they wouldn't be happy with a foreign company coming in," said a trader.
The FTSE 100 index closed 0.1 point up at 5,460.9, down from a session high of 5,481.7 after a day described by market watchers as an understandable pause in the FTSE's 6-percent-plus surge from a four-month low of 5,130 on October 21.
"This market has been a bit of a comeback kid and that's pretty much been non-stop, so OK we're having a bit of a pause," said Mike Lenhoff, chief strategist at brokerage Brewin Dolphin.
He said he thought the four-year high of 5,515 reached on October 3 would prove tough resistance but said the FTSE 100 could still move up towards his year-end target of 5,700 points.
"I'm not sure there's any reason to be negative about the market at the moment. The valuations are OK, the news flow still seems to be alright the background is still OK. Technically, the market wants to have a bit of a pause and that's all I think it's going to be."
Half-year pretax profit at Cable & Wireless, Britain's second-biggest provider of corporate telecoms services, fell but was still ahead of analysts' expectations, while the dividend rose 21 percent, which attracted buyers.
"The dividend was a little bit better than expected, and the buyback has added support," one trader said. Another said that investors were disappointed with the business but happy with the cash C&W was giving back.
Directories business Yell gained 1.6 percent after it posted a 14.5 percent rise in first-half profit, said it was on track to meet full-year expectations, and increased its interim dividend by 21 percent.
Retailer Marks & Spencer finished fractionally ahead, with dealers reporting that the company's expectation of tough trading conditions counterbalanced its confirmation that designer George Davies would stay on at the Per Una division. Davies said recently he would leave amid a spat over contract terms.
"George running Per Una is a positive, but the numbers are disappointing and the stock has been phenomenal of late," said a trader.
Among other companies reporting, Associated British Foods dipped 1.5 percent despite reporting that annual profits rose an expected 12 percent, boosted by a jump in profits at its Primark discount clothes stores.
Traders said the shares fell because analysts saw only modest growth this year as the company consolidates its acquisitions.
Brewer Scottish & Newcastle fell 2.1 percent after earnings growth at its Baltic Beverages Holdings affiliate slowed.
Among midcap shares, electrical and electronics supplies distributor Electrocomponents jumped 7.8 percent, after news of improved sales in October outweighed a fall in first-half pretax profit. In the same sector, Premier Farnell added 8.9 percent.
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