A reversal by heavyweight mining issues pulled top share index modestly lower on Tuesday, with investors taking a breather after the U.S. data-led surge on Monday and awaiting further pointers to the state of the world's biggest economy.
At 11:36 a.m., the FTSE 100 <.FTSE> index was down 8.65 points, or 0.2 percent at 5,866.24, after leaping 1.9 percent on Monday to record its biggest daily rise in two months.
Strong data from the U.S. and China propelled the rally yesterday, but caution now persists as we wait for today's economic data, said Ben Critchley, Sales Trader at IG Index.
As well as U.S. factory orders for February, the latest set of Fed minutes will be released, and the bulls will be hoping that the wording of the meeting will reveal a continued accommodative stance, Critchley added.
U.S. stock index futures pointed to a slightly weaker start on Wall Street on Tuesday, after strong gains in the previous session, with February U.S. factory orders due out just after the open at 03:00 p.m.
The March FOMC meeting minutes are not due for release until after the London close at 07:00 p.m.
Miners <.FTNMX1770> were the biggest drag on the blue chips, having provided the main boost on Monday, with copper prices falling back after a surge on the strong data from the United States, and from China, in the previous session.
Banks <.FTNMX8350>, which also led the leap higher on Monday, eased back as well.
Royal Bank of Scotland , down 2.3 percent, was the top FTSE 100 faller as talk of a possible sale of a stake in the majority-state-owned lender by the British government faded.
However, among other financial issues, fund manager Aberdeen Asset Management was the top FTSE 100 riser, ahead 2.3 percent, supported by positive broker comment.
Morgan Stanley hiked its target price for Aberdeen Asset to 314 pence from 260 pence and described the stock as a a core pick in the diversified financials universe, saying it offered better relative growth in terms of flows and margins and increasing capital distribution.
Contract caterer Compass Group was a big blue chip faller, shedding 1.8 percent as Morgan Stanley cut its rating to equal-weight from overweight, while raising its target price to 670 pence from 630 pence, and upping its EPS estimates by 1 percent, citing valuation grounds.
Negative broker comment also weighed on packaging blue chip Bunzl , down 1.3 percent, as BofA Merrill Lynch downgraded its rating to underperform from neutral in a European business services review.
Over the next 12M we expect economic growth to improve and think the bias of performance may shift to value or higher beta shares. As a result, we have changed the balance of our ratings, Merrill said in the review, in which it also upgraded its rating for mid cap staffing firm Hays to buy.
Hays gained 2.5 percent, with the FTSE 250 <.FTMC> index up 0.1 percent.
Energy explorers were the best mid cap performers led by Heritage Oil , up 10.5 percent, after the company said it had discovered dry gas in its Kurdistan well in Iraq.
Cairn Energy was also in demand, ahead 3.6 percent after it said it would buy Agora Oil & Gas for $450 million to increase its drilling activity in Britain and Norway in 2012 and expand its lower risk, near-term exploration assets.
The announcement of the Agora acquisition shows further diversification of resources and should serve to reassure investors that Cairn is exceptionally well placed for continuing growth, said Richard Curr, head of dealing at Prime Markets.
Prime Markets said it believes that Cairn shares are unlikely to be this close to year lows for long, and the shares should be snapped up at current levels.
(Editing by Toby Chopra)