Britain's FTSE 100 index closed easier on Thursday, giving up an early advance as buyers paused after Wednesday's steep gains on easing interest rate tensions.
However, support services company Capita stood out with a 9.3 percent rise after it posted a forecast-beating 24 percent jump in interim profits.
The company, which runs London's congestion charge on vehicle users, said it anticipated strong growth in 2007 due to strong demand and rising sales.
Traders said investors were happy to let share prices idle following Wednesday's 1.7 percent gain after markets interpreted remarks from Federal Reserve Chairman Ben Bernanke as a sign that U.S. interest rates could top out after rising for two years.
The FTSE 100 closed 7.1 points down at 5,770.9, giving back a fraction of the previous session's 96-point jump, after touching a day's peak of 5,819.7. The index subsided during the afternoon as U.S. shares opened lower.
Much of the impact on the FTSE was made by weaker oil shares as the crude price showed further losses, with BP down 1 percent.
Will Armitage at spread betters IG Index said buyers were mulling over their initial enthusiasm in response to Bernanke, who was speaking on the U.S. economy for a second straight day on Thursday.
If the economy is indeed moderating where is future earnings growth going to come from? Perhaps the euphoria of yesterday has abated today. It needs a bit of consolidation, said Armitage.
Robert Parkes, UK equities strategist at HSBC Securities, said UK shares could push ahead vigorously to the end of the year if indeed Bernanke's remarks herald the end to U.S. interest rate tightening.
History would suggest that the FTSE would put on about 10 percent in the six months post the peak in interest rate rises, so that's obviously very positive stuff, said Parkes.
Two midcap companies sported heavy losses in the wake of results. Communications provider Colt Telecom slumped 23 percent after a drop in its second-quarter sales. The company reported tough UK and German markets which were unlikely to improve much in 2006 overall.
Consensus for this year now looks challenging, in our view, and visibility on the longer-term growth outlook is poor, said analysts at Morgan Stanley as they cut their rating on the business communications provider.
Furniture group MFI suffered a 20 percent drop as the firm posted an underlying interim loss and investors showed their disappointment that the company was still trying to revamp or sell its struggling retail business.
Talks are continuing over the possible sale of its retail arm and analysts at Panmure said it was not clear how much an exit from the business would cost MFI.
We continue to believe the stock is expensive given the problems it faces, the brokerage advised clients.
Ultra Electronics stood out with a 15 percent leap after a source said the British components maker was in talks with Finmeccanica over a possible takeover by the Italian company. The source added that a deal was not imminent.
Technology stocks were firm with wireless technology company CSR up 4 percent, boosted by upbeat earnings from Apple . They added the stock had recently lagged the market and was due a bounce, having fallen 25 percent since the beginning of July to Tuesday's four-month low of 991p.
Back among larger stocks, airline British Airways was up 3.1 percent as oil prices eased and as speculation returned of a bid for the carrier from Dubai's Emirates. Emirates could not immediately be reached to comment but last month said it had no plans to bid for BA.
(Additional reporting by Friedel Rother)