Weakness in banks and miners outweighed gains in defensive pharmaceuticals and food producers, pushing Britain's top share index down 0.2 percent early on Wednesday. By 0803 GMT the FTSE 100 had slipped 8.20 points to 4,417.34, after falling 0.2 percent the previous session.
The index is in mildly negative territory for the third consecutive day but is still up 27.6 percent from its trough in March.
"Everyone's waiting for a sell-off, the rally is two months old and a lot of people would like to see the market come off a bit," said Rob Griffiths, equity strategist at Cazenove.
"Long-only investors who missed the recent rally want to get in to the market at a lower level and those looking at the market on a fundamental level also think it should be weaker."
Banks were the biggest drag on the index, as investors booked profits on a sector that has jumped 111.3 percent since its trough in early March.
HSBC, Standard Chartered, Royal Bank of Scotland, Barclays and Lloyds Banking Group fell 0.3 to 4.4 percent.
Miners were also down, despite stronger metal prices.
Rio Tinto, Kazakhmys, Eurasian Natural Resources, Anglo American and BHP Billiton fell between 0.6 and 4.3 percent.
Defensive pharmaceutical, tobacco and food producers were the biggest positives for the index as investors rotated out of more cyclical sectors.
AstraZeneca, GlaxoSmithKline and Shire added between 0.5 and 2.1 percent while Associated British Foods rose 1.7 percent, Unilever gained 3.9 percent and British American Tobacco put on 1.4 percent.
Compass topped the list of FTSE 100 risers, gaining 7.1 percent after the world's biggest caterer reported a 40 percent rise in first-half profit, driven by new business wins and cost efficiencies.
But shares in J Sainsbury dipped 1.8 percent as some analysts said a slightly better-than-expected 11 percent rise in full-year profit from Britain's third-biggest grocer was already factored into a stock price which has a higher valuation than many of its peers.
Britain's biggest property company, Land Securities fell 5.4 percent after it said the value of its portfolio fell by 4.7 billion pounds ($7.1 billion).
Energy stocks were broadly higher as crude neared $60 per barrel after reaching a six-month high. BG Group, Royal Dutch Shell added 0.5 and 1.6 percent respectively but BP eased 1.3 percent after going ex-dividend.
Inmarsat also fell after trading ex-dividend this session though Sage added 0.6 percent.
Investors will look to the British inflation report at 0930 GMT for more clues about the health of the UK economy in the face of the global recession.
China's factory output growth slowed in April, providing fresh evidence a day after poor export data that recovery in the world's third-largest economy is not yet on a rock-solid footing.
