Britain's FTSE 100 index ended down on Friday as falling metals prices hit mining stocks and pharmaceutical companies suffered continued fallout from the US midterm election result. Despite persistent take-over speculation, analysts said equity indices may be in for a period of consolidation after recent surges to either record or multi-year highs.
Investors in the UK were also jittery that further rate rises may follow the Bank of England's decision on Thursday to lift its key rate by a quarter point to 5.0 percent. Pharmaceuticals slid lower on concerns that Democrat victories in Tuesday's US congressional elections would lead to more regulation in healthcare in that country. GlaxoSmithKline and AstraZeneca both shed about 2 percent.
"Pharmaceutical companies are still being hit by developments in the US and there's a lot of nervousness there regarding what the Democrats are going to do with health care policy," said Robert Parkes, a strategist at HSBC.
But "the election in the US is out the way now and the key news flow is going to be how strong the growth indicators are. There are a lot of concerns at the moment," he added.
The FTSE 100 index ended down 23.1 points or 0.37 percent at 6,208.4. "Today has been one of the quieter days and the market will struggle to make headway," said Tim Whitehead, portfolio manager at Redmayne Bentley. "There has been bid speculation but the market could not be called frothy."
The financial sector was hit by concern banks and financial companies may be squeezed by higher UK rates. HBOS was down 0.7 percent and HSBC fell about 1 percent. Miners also retreated as copper sank to a four-month low, with Rio Tinto, Antofagasta and Vedanta all falling between 2 and 3 percent.
But platinum producer Lonmin bucked the trend by rising 3 percent, after leaping 10 percent earlier in the session, after a broker upgrade and new speculation it may be the target of a take-over bid, traders said.
The firm declined to comment. "We don't think M&A activity has peaked yet we see it continuing with both trade buyers and private equity buyers continuing to target UK companies," said Parkes. "We see that trend continuing so that should support the market."
Talk of a private equity bid for Sainsbury's briefly pushed its share price to a five-year high. It rose more than 6 percent before slipping back to trade up 1.7 percent on the day.
Scottish Power rose 2 percent, extending its gains from the last session's gains. Spanish power company Iberdrola is considering bidding alone for the company and will make a final decision in the next few days, an industry source told Reuters on Friday. Investors are waiting for possible news over the weekend as Iberdrola's board met on Friday to discuss investment opportunities.
Oil explorer Cairn Energy topped the index's gainers, up 3.7 percent, after analysts and traders said a low share price and a planned Indian initial public offering (IPO) in December signalled any potential take-over bid was more likely to succeed if it was made soon.
"Its more of a consumer focus next week," said Andy Penman, global equity analyst at Barclays Wealth. "It is a really busy week in terms of economic data and important economic data in the US next week so that will probably take centre stage."
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