FTSE weakens as U.S. data disappoints

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Compounding worries, traders warned that fourth-quarter euro zone GDP data, set for release on Wednesday, could point to the fact the region is back in recession.

The benchmark <.FTSE> closed down 5.83 points, or 0.1 percent, at 5,899.87, having risen 0.9 percent on Monday after Athens's approval of austerity measures helped ease fears over a messy default.

Miners and banks, strong gainers on Monday, were the biggest drags on the index, as investors, rattled by the downbeat U.S. data and unconvinced Greece is off the hook, switched into defensive sectors such as drugmakers.

Yet more dire economic figures posted by Greece on Tuesday made it increasingly difficult to see the country being able to get its deficit under control, with flash estimates showing GDP shrank 7 percent in the fourth quarter of 2011.

"Those that missed the recent rally are reluctant to buy in for fears of an imminent sell off," Atif Latif, director of equities and derivatives at Guardian Stockbrokers, said.

"With sector rotation and defensive buying alongside downside protection being aggressively bought we may have seen the last push up before a correction."

InterContinental Hotels was among the biggest laggards, off 2.1 percent. The world No 1 hotelier unveiled robust full-year results but broker Charles Stanley cut its rating to "reduce" after a strong run in the shares.

Bunzl , meanwhile, grabbed the top spot on the blue chip leader board, up 3.7 percent, after JPMorgan hiked its rating for the packaging firm to "overweight" on valuation grounds.

"We believe that the recent relative underperformance could be a good entry point ahead of FY results on 27 February," JPMorgan said in a note.

Outsourcing group Capita was another good gainer, ahead 2.1 percent after it said it had been selected as recommended supplier to partner the Ministry of Defence in providing recruitment services for the Army and IT services for the Royal Navy and Royal Air Force.

(Editing by Jodie Ginsberg)