The leading index regained the 5,200 level after tracking an early decline on Wall Street as retailers and utilities cancel weak financials and miners.
Indications that the Dow's rally would extend to a third day proved wide of the mark as investors decided to bank profits ahead of the long Memorial Day weekend. The Dow Jones had risen 500 points since hitting a low of 9,756 on Tuesday.
After two days of breathtaking gains it may be indicative of the London's more sedate mood today that the best performing stock is still water group Severn Trent, the epitome of a safe but dull stock. The company lifted its full year dividend by 7.4% after an uplift in revenues and cost-cutting measures brought about a sharp rise in profits in the year to March 31. Underlying pre-tax profits rose to £338.4m from £273.5m the previous year, on revenues that climbed to £1.704bn from £1.642bn.
Leisure and travel stocks are in demand after Nomura Securities published an upbeat note on the sector in which is lauded Thomas Cook, TUI Group and Whitbread.
BP is the major blot on the landscape. It says it won't know if the 'top kill' procedure to plug the oil leak in the Gulf of Mexico has worked for another 24 to 48 hours, but in the meantime the costs keep rising, up to $930m (£639m) so far. The oil company started the top kill option, which involves pumping massive amounts of mud and cement into the well at high pressure, on Wednesday night.
Elsewhere in the sector Royal Dutch Shell has joined the rush to snap up US shale gas assets with the $4.7bn purchase of East Resources. Pennsylvania-based East's primary activity is focused on the Marcellus shale, in the north-east of the US.
Life group Prudential this morning confirmed it has had talks over the terms of the purchase of AIG's Asian arm (AIA). Reports overnight said Tidjane Thiam, Pru's chief executive, was in the US trying to get the price of buying AIA deal reduced from $35.5bn to $30bn to head off a shareholder revolt that could scupper the deal completely.
Fresnillo's chairman Alberto Baillères is confident of a successful year for the Mexican silver and gold miner after a strong start to the year, underpinned by higher than expected precious metal prices.
Strongly weekly sales data from the John Lewis Group has put some oomph into the share prices
of clothing retailers Next and Marks & Spencer. The department store group said Fashion was its best performing division, with sales 15% higher than a year ago.
Plumbers merchant BSS Group is sharply higher after it was revealed it is in bid talks with fellow building materials merchant Travis Perkins. The two parties are discussing an indicative offer made up of 232.91p in cash, 0.2608 new Travis Perkins shares
per BSS share and the payment of BSS's final dividend for the year to 31 March 2010 of 6.09p a share. The terms value BSS at about £553m.
Distributor Electrocomponents staged a strong recovery in the second half that it says has continued into the current year so far. But underlying profits increased by 11% in the second half of the year while sales continued to pick up throughout the period and were 15% higher in the fourth quarter than the comparable period.
Internet gambling group 888 has warned that full-year profit is likely to be significantly lower than previous market expectations due to ongoing weakness at the online poker business and the strong dollar. Sector peer Partygaming folds in sympathy.
Beer flow monitoring system firm Brulines has decided against launching a bid for Universe Group, eight months after it first approached the electronic payment and loyalty card provider.
Solar power technology group Jetion Solar Holdings plunged after warning that the weak euro will cause a drop in first half profits. Business has been "satisfactory" during the first quarter, but margins have suffered as most of its sales are into Europe, the world's largest solar market.
Quantity surveyor Baqus is another bearer of bad news. It has warned that results for the year ending 30 June 2010 will be below expectations due to extended lead-times on projects in the construction industry. "This slow-down has been increasingly pronounced since the result of the General Election and the continued lack of bank lending for construction schemes," the group said.
Gulf of Mexico-focused Leed Petroleum has recompleted the A-7 well in the Eugene Island 183 Field to a shallower horizon and is currently producing at a gross rate of 802 barrels of oil equivalent per day.