After a positive start, markets had pared gains by midday with sentiment hit by reports of two ballistic 'objects' heading towards the East Mediterranean.
Market Analyst Craig Erlam from Alpari said that traders became "instantly risk averse on fears that the US had initiated a military strike without Congressional approval". Later reports then confirmed that the launch was just a test and the missiles had fallen into the sea.
Nevertheless, this is likely to have reignited tensions between Syria and America, which is holding Bashar Al-Assad's regime responsible for a wave of recent chemical weapons attacks that have left over a thousand Syrians dead.
"While the markets may recover as the day goes on, traders will remain on red alert for any further noises out of the Middle East. For now, caution is key for traders but it's only a matter of time until risk aversion takes over."
Strong gains made on Monday also provided another element of caution today after the FTSE 100 advanced 1.5% on low-volume trade due to better-than-expected manufacturing data from the UK, Eurozone and China. Volumes are expected to pick up today with Wall Street re-opening after Labour Day.
FTSE 100: Vodafone pulls back after agreeing on VZW disposal
Vodafone will be in focus today after late last night reaching an agreement to sell its 45% stake in US outfit Verizon Wireless to Verizon Communications in a transaction valued at $130bn (£84bn) in cash and shares. Shareholders are expected to receive 71% of the net proceeds of the disposal. The stock was a heavy faller this morning, pulling back after a strong rise over the last few days.
Real estate groups were under pressure this morning after Deutsche Bank downgraded stocks and target prices across the sector. Land Securities and British Land were among the worst performers after the bank cut its ratings for both to 'hold'.
Security solutions firm G4S was also lower after Credit Suisse lowered its recommendation from 'outperform' to 'neutral', saying that the stock has re-rated and is now trading at a premium to its historic average.
Heading the other way was Primark owner and food ingredients group AB Foods after Exane BNP Paribas raised the stock to 'outperform'.
Mining group Rio Tinto was extending gains this morning after yesterday reporting the first shipment of iron ore from its expanded operations in Western Australia. "We are attracted by Rio's value, quality volume growth and cost cutting potential," said analysts at UBS this morning.
FTSE 250: Genus drops after full-year results
Genus fell sharply this morning despite increasing its annual dividend by 10% and saying it expected revenue growth to improve as it reported a rise in underlying profits. The animal genetics company's adjusted pre-tax profit rose 2% to £47.2m in the year ended June 30th even as feed costs increased. Statutory profit before tax however fell 30% to £38.1m because of a fall in the value of biological assets under accounting rules.
Spirent Communications rose after saying its Chief Executive Officer Bill Burns will step down from the company with immediate effect. Chief Financial Officer Eric Hutchinson will replace Burns in the interim while the technology firm searches for a successor.
FTSE 100 - Risers
Tullow Oil (TLW) 1,050.00p +3.14%
Associated British Foods (ABF) 1,905.00p +1.44%
Antofagasta (ANTO) 897.50p +1.36%
Rio Tinto (RIO) 3,075.00p +1.32%
BHP Billiton (BLT) 1,944.50p +1.22%
Capita (CPI) 971.00p +0.99%
Imperial Tobacco Group (IMT) 2,153.00p +0.94%
Reckitt Benckiser Group (RB.) 4,463.00p +0.90%
HSBC Holdings (HSBA) 693.10p +0.87%
BT Group (BT.A) 341.10p +0.86%
FTSE 100 - Fallers
Vodafone Group (VOD) 205.20p -3.75%
Carnival (CCL) 2,373.00p -2.06%
Land Securities Group (LAND) 895.00p -1.49%
Standard Life (SL.) 338.70p -1.40%
Pearson (PSON) 1,282.00p -1.31%
G4S (GFS) 257.50p -1.30%
William Hill (WMH) 416.20p -1.19%
British Land Co (BLND) 560.50p -1.15%
TUI Travel (TT.) 344.60p -1.06%
Meggitt (MGGT) 528.00p -0.75%
FTSE 250 - Risers
Dixons Retail (DXNS) 43.75p +5.42%
Spirent Communications (SPT) 135.30p +5.21%
TalkTalk Telecom Group (TALK) 258.20p +4.11%
Dialight (DIA) 1,406.00p +2.63%
Xaar (XAR) 803.50p +2.62%
F&C Asset Management (FCAM) 97.70p +2.20%
Salamander Energy (SMDR) 132.00p +2.09%
Keller Group (KLR) 1,131.00p +2.08%
Hochschild Mining (HOC) 262.70p +1.98%
Balfour Beatty (BBY) 255.20p +1.96%
FTSE 250 - Fallers
Genus (GNS) 1,350.00p -8.72%
JPMorgan Indian Inv Trust (JII) 284.50p -5.17%
Evraz (EVR) 123.20p -2.92%
Capital & Counties Properties (CAPC) 317.70p -2.25%
St. Modwen Properties (SMP) 297.40p -2.17%
Fidessa Group (FDSA) 2,104.00p -2.05%
Rathbone Brothers (RAT) 1,582.00p -2.04%
Debenhams (DEB) 106.30p -2.03%
Go-Ahead Group (GOG) 1,484.00p -1.98%
Amlin (AML) 390.80p -1.93%