Britain's FTSE 100 ended lower on Thursday, failing to hold above they key psychological 6,000 resistance level as results from clothing retailer Next and grocery chain Morrison disappointed investors.
Support services group Capita was a further drag after its shares fell more than 3 percent following the resignation of its chairman. Rod Aldridge left Capita after publicity over a loan he made to the ruling Labour Party, saying he did not want misconceptions that the loan had helped Capita to win contracts to continue.
"His departure will erode the group's competitive advantage, lowering potential growth," said analyst Mike Murphy at Panmure.
Even insurer Friends Provident failed to get off the ground despite solid results, with dealers saying some investors were unimpressed that the company did not beat forecasts by as much as others in the industry. Its shares closed just under 2 percent lower.
The FTSE blue chip index ended the session down 17.4 points, or 0.3 percent, at 5,990.1 having retreated from an earlier rise to 6,029.4. Market watchers said the market was fatigued, having been boosted by a flurry of take-over speculation, which has so far to materialise.
"There's a tendency to want to take some profits around this classic dividing line. There's a sense that perhaps the market is a little too frothy. Some people had year-end forecasts at around 6,100-6,200 so they are thinking its time for a pause," said Stuart Fraser of private client money manager Brewin Dolphin.
The other dampener is this big question about where interest rates are going to go in the United States. But everywhere else the market looks supported. I think it can push past that (6,000-point) level."
The reassessment of strong rises was exemplified by the property sector, which retreated after Wednesday's strong run when the UK government said it would charge property firms 2 percent of the gross market value of their investment properties to attain REIT status, less than some had feared.
"Most people's research coming out today is suggesting the news is all priced in," said one dealer as British Land lost 4.7 percent and Land Securities dropped 3.9 percent.
But Caterer Compass headed higher, adding more than 4 percent after Morgan Stanley predicted a period of upbeat news for the company. "We are hopeful of an update on the search for a new CEO and pleased a firm timetable has been agreed for the formal appointment of the new chairman," analysts wrote in a research note.
Elsewhere on the upside, miner Anglo American was one of the top FTSE 100 gainers, up 3.1 percent after it doubled its share buyback programme. It is the second time in a month the world's third-largest miner has increased the amount being returned to shareholders.
Among mid-cap stocks, hotelier De Vere surged 10 percent after it became the latest company to receive a take-over approach.
Elsewhere on the simmering merger and acquisition trail, shares in support services company Babcock International climbed 4.2 percent to 270 pence amid talk that defence company BAE Systems might be considering a bid.
One trader reported speculation that any bid could be pitched at 400 pence a share.
But news that an investment vehicle part-owned by Iranian property tycoon Robert Tchenguiz was no longer considering making a bid for Luminar sent shares in the night-club operator 5 percent lower.
Food group RHM, the maker of Mr Kipling cakes and Hovis bread, rose 3.8 percent, boosted by an upgrade from Credit Suisse analysts, but a casino operator Stanley Leisure fell after a Merrill Lynch downgrade.
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