The FTSE 100 <.FTSE> share index closed down on Friday, as investors gave pause to the sharp gains made on the outline deal announced by government leaders on Thursday to tackle the euro zone debt crisis, with banking stocks among the top fallers.
London's blue chip index <.FTSE> closed down 11.58, or 0.2 percent at 5,702.24, having gained 2.9 percent on Thursday, as the FTSE failed to hold above its 200-day moving average of around 5,720.
Intra-day momentum oscillators are losing upward momentum and are turning down from their overbought territory, Nicolas Suiffet, analyst at Trading Central, said.
The immediate trend is down but the momentum is weak. A pause is likely ahead of a new up leg, he said, adding his preference was for a long position above 5,621 with a target of 5,770.
Following the progress that risk assets have made, we are braced to see more downside from here as investors begin to look for more detail (on the European debt deal), said Lothar Mentel, chief investment officer at Octopus Investments which manages $4 billion (2.5 billion pounds).
We remain cautiously positioned and ready to move to take advantage of opportunities that present themselves.
Banks <.FTNMX8350>, which rose 7.9 percent in the previous session, fell as investors banked profits. The sector is down more than 18 percent in 2011.
Royal Bank of Scotland
Hedge fund firm Man Group
Integrated oils <.FTNMX0530> were weaker too, along with the price of oil, which shed more than 1 percent.
Reminders of the risk still posed by Europe's debt situation came with Italian government bond yields rising on Friday after a disappointing debt auction suggested the euro zone rescue deal had not gone far enough.
Wall Street was flat as the UK market closed but there was more bullish data on the state of the world's biggest economy to buoy investors.
U.S. consumer sentiment improved in October for the second month in a row as consumers felt more upbeat about the economy's prospects, data showed.
IAG WINGS CLIPPED
Shares in British Airways and Iberia owner International Consolidated Airlines Group (IAG)
There were strong performances from some key products, although gross margin contraction of 160 basis points was disappointing, Panmure Gordon said in a note, keeping its sell rating.
Shares in Shire have risen by 28 percent since the start of the year.
Other defensives featured on the upside, with British American Tobacco
Elsewhere, WPP Group
(Editing by Greg Mahlich0