The FTSE 100 ebbed lower by midday on Tuesday as investors kept to the sidelines awaiting further news on Greek debt talks, and as Glencore's merger with miner Xstrata met opposition from shareholders.
London's blue-chip index <.FTSE> was down 23.9 points, or 0.4 percent, at 5,868.30 by 1147 GMT.
The index remains near six-month highs having risen some 3 percent last week, but analysts said recent gains coupled with lingering uncertainty over Greece's debt deal had created a short-term trading range between 5,780 and 5,901.
Greek political leaders face crunch talks on Tuesday and a debt deal must be approved by the euro zone, the European Central Bank and the International Monetary Fund before February 15.
The fact that we have not seen a large sell-off suggests investors, though cautious, remain optimistic a deal will be done, Jimmy Yates, head of equities at CMC Markets, said.
He said defensives remain a safer option, despite lagging in 2012, alongside a little hedging in cyclical shares as a deal for Greece is awaited.
Citigroup said it expects Greece to avoid disorderly default but raised the chances of a Greek euro area exit in the next 18 months to 50 percent from 25-30 percent.
With those concerns in the background, investors continued to take profits on miners <.FTNMX1770>, which have led the FTSE 100 higher in 2012, rising more than 21 percent.
Glencore, the world's largest diversified commodities trading house, will issue 2.8 new shares for each Xstrata share, representing a 15.2 percent premium to Xstrata shareholders when some analysts had been calling for a minimum 20 percent premium.
In other M&A news, British banking software firm Misys
Our standalone valuation of both businesses suggests that both are richly valued, with the quality of earnings at Temenos an increasing concern, the bank said, with Misys having gained 45 percent since December.
Other cyclicals retreated too, with heavyweight BP
Production is due to resume late on Tuesday, but the announcement took the gloss off the oil major's above-forecast fourth-quarter earnings and a better-than-expected dividend.
Retailers Marks & Spencer
Defensives led on the upside as investors' risk appetite faded.
Newspaper market reports revived vague talk of a possible 3,500-pence-a-share takeover offer for Shire, with a number of companies having been mentioned as possible bidders.
Pharmaceutical peer GlaxoSmithKline
(Written by David Brett; Editing by David Hulmes)