Britain's leading shares closed lower on Thursday, turning tail from a higher start after the European Central Bank hiked rates, although strong results buoyed financials such as Standard Chartered and Aviva.
Asia-focused bank Standard led the minority of FTSE 100 gainers, closing 3.8 percent up after topping analyst forecasts with a 19 percent annual profit rise, boosted by its biggest-ever acquisition and its participation in fast-growing markets.
Britain's biggest insurer Aviva also bettered expectations with a 29 percent increase in 2005 profit, which along with a confident outlook for 2006 boosted its shares by 3.7 percent.
The FTSE 100 index closed 11.1 points down at 5,833.0, swinging in a big range after touching 5,880 in early business, unsettled by the ECB's rate hike and warning on the inflationary outlook. The index is still up around 4 percent since the beginning of the year.
A big a early fall on Wall Street after weak sales reports from several US chain stores also weighed on the index.
Angus Campbell, head of sales and marketing at spread betters Finspreads said investors were starting to wonder whether the FTSE was ripe for a setback after recently touching near-5-year highs.
"It's been a huge swing today. Weakness across all world indices has given cause for concern. Is this the level that we're going to see a correction? From a fundamental point of view the ECB put up its rates today and there is still concern about growth and retail sales," he said.
Richard Hunter at brokerage Hargreaves Lansdown said investors were becoming uncertain about the direction of UK rates although the main drivers to push the FTSE this year, strong earnings and mergers and acquisitions activity, remained in place.
"In terms of corporate earnings and even with M&A activity, nothing's actually changed today. It could well just be a pause for breath," he said.
Aviva's strong performance drew more investors to the insurance sector, which is widely regarded as ripe for consolidation, with Royal & Sun Alliance up 2.5 percent.
Bid speculation supported shares in airports operator BAA which rose 0.3 percent after Spanish media reported that a bid from Ferrovial for the British company could be imminent.
Most mining stocks advanced as base metals prices rose, with copper gaining as widening labour strikes in Mexico's mining sector raised global supply fears. London listed Kazakh copper miner Kazakhmys gained 3.4 percent, while Chilean copper miner Antofagasta rose 1.1 percent.
On the downside, shares in mortgage bank HBOS fell 1.8 percent after Fox-Pitt, Kelton cut its rating on the stock to "in-line" from "outperform" and recommended a switch into Royal Bank of Scotland, which fell 0.8 percent.
The world's largest hotelier InterContinental Hotels Plc gave up early gains to trade 2.5 percent lower after posting profits just shy of analyst forecasts and despite announcing a further special dividend to shareholders of 500 million pounds.
Mid-cap engineering group Tomkins closed 5.7 percent lower at 316 pence, falling right from the opening after news almost 10 percent of its stock was to be placed on the market. Merrill Lynch International said during the afternoon the secondary placing was carried out at 318p per share. Dealers earlier said they thought the range would be 318p-320p.
Lower down the market soft drinks company Britvic shed just over a fifth of its market value after it said its results were likely to be at the lower end of market expectations following a weakening in Britain's soft drinks market since Christmas.
"If you've been through the results season so far it's been pretty good," said one trader. "But where you've not come up with the goods you have been cruelly treated."
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