The FTSE 100 reversed earlier gains and was down 0.3 percent by 0926 GMT. Still, the market looked likely to mark a rise for the week, having recouped some of the ground lost in last week's dramatic sell-off.

The FTSE outperformed European stocks thanks to its big weighting to high-dividend-yielding stocks, which investors flock to in times of economic uncertainty. Oil majors BP and Shell helped stem the losses as crude prices climbed.

With earnings season in full swing, investor sentiment has grown increasingly gloomy this week, with few examples to give much cheer.

Topping the FTSE 100 losers, InterContinental's weaker-than-expected revenue added to the downbeat mood and stirred concerns about the cooling travel sector, even after the hotel chain said it would return 500 million euro ($572 million) to shareholders through a special dividend.

Its shares were down 6.5 percent after hitting their lowest in more than a year.

"Revenue per available rooms is a little lower than hoped for, largely as a result of weak occupancy numbers in the US," said Nicholas Hyett, equity analyst at Hargreaves Lansdown.

"With IHG rapidly expanding its rate of room growth, including some sizeable acquisitions and new brand launches, lower revenues are far from welcome."

Broker moves drove other shares. Easyjet was the second-biggest faller, down 6.4 percent, after a MainFirst downgrade.

Dechra Pharmaceuticals was one of only a few gainers on the mid-cap FTSE 250 after Stifel upgraded the stock to buy.

Otherwise weak earnings took centre stage on the domestically focused index, which was down 0.7 percent and looked set for its fourth straight weekly loss. Industrials were the biggest drag.

Precision engineering group Renishaw Plc topped the loser board, hitting its lowest level in more than a year and down 6.8 percent after a trading statement.

In M&A news, retail property developer Intu Properties surged 12 percent to the top of the FTSE 250 after saying it was considering a 215 pence takeover offer from a consortium led by its deputy chairman John Whittaker and Saudi Arabian and Canadian investors.

The shares were still below the offer price at 202 pence.

Small caps were also hit by earnings news. Auto retailer Pendragon slid 11 percent after warning that new emissions rules will dent results.

The news dragged mid-cap car dealership Inchcape down 3.5 percent to its weakest in more than five years.