Britain's FTSE 100 index ended flat on Friday, retreating from five-and-a-half year intraday highs as disappointing results from Caterpillar sapped confidence and prompted a soft start to Wall Street trade.
The index, which surged to its highest level since February 2001 in the slipstream of miners and oil producers and as third-quarter data showed the UK economy growing at its fastest annual rate in two years, ran out of steam when base metals stalled and Caterpillar confounded expectations.
"This news will weigh heavily on the rest of the market," said Martin Slaney of GFT Global Markets. "The market was braced for bad numbers but the housing slowdown has clearly hit construction spending much harder than the market expected."
As a major constituent of the Dow Jones, which itself slipped from Thursday's record close, Caterpillar was seen by some traders as a proxy for the health of the US economy.
An early rally for miners disintegrated as base and precious metals struggled to hold onto gains, leaving Anglo-American and Xstrata lower.
Rio Tinto managed to cling to small advances while BHP Billiton was flat.
Oil majors were mixed, as crude prices fell below $58 a barrel after Opec agreed to more output curbs than expected but concerns surfaced that some of the group's members may fail to comply with the cuts.
BP edged up while Shell eased as new regulatory problems emerged with Russian projects.
"Caterpillar crawled in, but probably the bigger influence on our market is the vagaries of commodity price movements, which today are mixed, like the FTSE," said one trader.
The FTSE 100 index of Britain's leading shares closed down 0.8 points at 6,155.2, off a high of 6,199.8 struck after the strong GDP numbers earlier in the day.
British Energy fell 4.6 percent, resuming this week's steep decline as it continued an emergency programme to check boilers at its nuclear reactors. The stock is down 20 percent on the week with traders saying it is also undermined by its lack of dividend and the overhang of the UK government's stake.
Banks and insurers were lower, susceptible once again to investors taking profits as another burst of take-over whispers came to nothing, and as investors braced for a likely interest rate rise in November.
Lloyds, HBOS Northern Rock and Prudential were the biggest losers. Corus lost 1 percent after India's Tata Steel won approval from the Anglo-Dutch steelmaker for its friendly take-over bid, although the stock pared earlier losses as analysts bet another player could yet intervene.
"I think the opportunity to acquire steel manufacturers of this size are obviously few and far between, so I wouldn't be surprised to see someone else coming out with a hostile 5 pound offer and getting into some kind of auction process," said Tim Whitehead, portfolio manager at Redmayne-Bentley.
On the upside, property firm Hammerson rose 2.6 percent on renewed bid speculation, traders said, with both private equity firms and other property companies in the frame as interest in the sector intensifies ahead of the 2007 introduction of tax-efficient UK Real Estate Investment Trusts.
Media stocks were also stronger. Publisher Pearson rose 0.9 percent after broker upgrades, while Reuters rose for a second day as it recovered from Wednesday's results-driven slide, rising 1.8 percent. Intercontinental Hotels climbed 2.5 percent after Thursday's strong results from competitor Marriott.
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