The FTSE shares on Wednesday as concerns over Europe's debt problems returned to the fore ahead of Spanish and Italian debt auctions later this week.
The UK benchmark <.FTSE> was down 9.99 points, or 0.2 percent, at 5,686.71 by 09:17 a.m. BT, having jumped 1.5 percent on Tuesday, partly due to optimism about the U.S. earnings season after an upbeat outlook from Alcoa
Atif Latif, director of equities and derivatives at Guardian Stockbrokers, said that with euro zone sovereign funding problems unresolved, the market could have got ahead of itself, and may be set for a correction to December lows at around 5,330.
We have seen more flow back onto the defensive side, with more downside protection being added and some longs being trimmed, he said.
There has been no marked improvement in the macroeconomic situation, and pressures still remain. We would look to add into short positions for downside protection.
Bill McNamara, technical analyst at Charles Stanley, said the FTSE 100 would need to see a close above the intra-day high from October at 5,747 before being out of the woods, and failure here would probably deal a significant blow to sentiment in the near term.
Energy stocks <.FTNMX8350> were the biggest drag on the blue-chip index, led by a 1.2-percent drop in Royal Dutch Shell
Broker recommendation changes were behind a number of moves on the blue-chip index on Wednesday.
Household products group Reckitt Benckiser
Morgan Stanley lifted its stance for Reckitt to overweight from equal-weight, and made the reverse change for Unilever, down to equal-weight from overweight, with both changes mainly made on valuation grounds, traders said.
Merrill Lynch, meanwhile, cut Unilever to underperform from neutral, and reduced its price objective to 2,140 pence from 2,190 pence, also highlighting the stock's premium rating.
HIGH STREET CHEER
Retailers found favour, with J Sainsbury
Analysts believe Sainsbury's had the strongest December of Britain's top four grocers based on market research data from Kantar Worldpanel published on Tuesday.
It is clear that Sainsbury has had a very good Christmas, and with the Kantar data showing that (Wal-Mart's
This significant underperformance of Tesco relative to Sainsbury is in part due to the growth in Sainsbury's non-food business (from a relatively low base) whereas Tesco's non-food continues to act as a major drag, the broker said.
A day before its Christmas trading update, Tesco
Among mid-caps, SuperGroup
(Editing by Will Waterman)