The FTSE 100 opened flat on Wednesday morning following a one per cent surge the day before, as investors awaited announcements from central banks and a number of key economic indicators from around the globe.
"After having the strongest day of the year so far, European stock markets are in consolidation mode ahead of a deluge of economic data and minutes from the Bank of England first and the Federal Reserve after the European market close," said market strategist Ishaq Siddiqi from ETX Capital.
Unemployment and earnings data is also due out in the UK this morning, as well as housing starts, building permits and inflation figures later on in the States.
Stocks jumped on Tuesday after the ZEW Institute's index, which measures economic sentiment in Germany, soared to 48.2 in February, ahead of last month's reading of 31.5 surpassing forecasts of a reading of 35 .
Meanwhile, with US retailers Office Depot and OfficeMax reported to be close to a merger announcement yesterday, the increase in M&A activity over the past few days has boosted confidence on the markets. Last week saw Warren Buffett's Berkshire Hathaway and private equity firm 3G launch a $28bn takeover offer for food products giant Heinz.
"There has been a huge surge in M&A activity so far this year, which is an extremely positive sign that businesses are much more optimistic than they've been in a long time," said market strategist Ishaq Siddiqi.
"The rally in the stock markets may have been driven by central bank stimulus up until this point, but this improvement in M&A activity is what's going to keep them hitting new multi-year highs."
FTSE 100: RSA plummets after results; Barclays hit by downgrade
Extreme wet weather in the UK, combined with earthquakes in Italy, contributed to a 5.9% fall in RSA Insurance's operating result for the full year 2012. Furthermore, the firm has unveiled a 33% cut in its annual dividend due to the likelihood for a prolonged period of low bond yields. Shares plunged in the opening hour of trade.
Banking group Barclays was also under the weather after Goldman Sachs downgraded its rating for the stock to 'neutral' and cut its target price from 350p to 340p.
BHP Billiton was also lower after announcing a new CEO as its half-year profits dropped 58% on the back of weak commodity prices and a strong Australian dollar.
Rexam, the consumer packaging group, surged despite saying that pre-tax profits fell 11.9% in 2012. The company raised its dividend by 6.0%.
Industrial engineering group Weir gained after spending £55m on three acquisition to strengthen its presence in the fast-growing mining markets.
Natural gas giant BG Group is reported to have hired Goldman Sachs to help analyse options for selling part of the infrastructure linked to its Australian liquefied natural gas project. Shares were up early on.
Telecoms firm Vodafone was lower after spending £790m on buying spectrum licences for ultra-fast 4G mobile networks. BT, which spent £186m on a different band, was in demand.
FTSE 250: Elementis up after acquisition
Elementis, the speciality chemicals group, has agreed to acquire the assets of Hi-Mar Specialty Chemicals, a US coatings additives company, for $33m, causing shares
to rise this morning. "The acquisition of Hi-Mar Specialty Chemicals broadens our capabilities in value added, higher margin defoamer markets," said Chief Executive David Dutro.
House-builder Galliford Try gained after lifting its dividend by a third in spite of a 9.0% fall in group revenue and flat profits in 2012.
Meanwhile, building materials group Travis Perkins fell after saying that "volatile conditions will persist in the shot term". Nevertheless, the company was able to increase pre-tax profits by 16.2% in 2012, while revenue rose 1.4%.
FTSE 100 - Risers
Rexam (REX) 498.40p +4.55%
Royal Bank of Scotland Group (RBS) 353.20p +2.35%
ITV (ITV) 125.00p +1.63%
Melrose Industries (MRO) 246.60p +1.61%
Bunzl (BNZL) 1,239.00p +1.47%
CRH (CRH) 1,417.00p +1.36%
Polymetal International (POLY) 1,020.00p +1.29%
IMI (IMI) 1,189.00p +1.28%
TUI Travel (TT.) 333.90p +1.27%
Wolseley (WOS) 3,134.00p +1.13%
FTSE 100 - Fallers
RSA Insurance Group (RSA) 118.60p -12.99%
Aviva (AV.) 359.90p -2.52%
BHP Billiton (BLT) 2,187.50p -2.17%
GlaxoSmithKline (GSK) 1,470.00p -1.08%
InterContinental Hotels Group (IHG) 1,932.00p -1.08%
Rio Tinto (RIO) 3,676.00p -1.01%
Reckitt Benckiser Group (RB.) 4,528.00p -0.83%
Standard Chartered (STAN) 1,758.00p -0.73%
Carnival (CCL) 2,467.00p -0.72%
Evraz (EVR) 284.80p -0.63%
FTSE 250 - Risers
Barratt Developments (BDEV) 240.90p +3.04%
Stobart Group Ltd. (STOB) 95.75p +2.63%
Taylor Wimpey (TW.) 79.45p +2.52%
Savills (SVS) 520.00p +2.36%
Balfour Beatty (BBY) 279.40p +2.05%
Ted Baker (TED) 1,199.00p +2.04%
Bovis Homes Group (BVS) 678.50p +1.72%
Berkeley Group Holdings (The) (BKG) 1,898.00p +1.66%
Inchcape (INCH) 512.50p +1.59%
WH Smith (SMWH) 713.00p +1.57%
FTSE 250 - Fallers
Bumi (BUMI) 382.10p -3.51%
Centamin (DI) (CEY) 56.10p -3.36%
Catlin Group Ltd. (CGL) 508.50p -3.23%
Rathbone Brothers (RAT) 1,402.00p -2.64%
Hochschild Mining (HOC) 417.00p -2.32%
IP Group (IPO) 126.10p -1.87%
Travis Perkins (TPK) 1,286.00p -1.68%
Sports Direct International (SPD) 430.20p -1.56%
Petropavlovsk (POG) 314.90p -1.50%
Debenhams (DEB) 96.35p -1.23%