Britain's top share index fell 0.3 percent in early trade on Wednesday, halting three straight days of gains, as strength in energy stocks was offset by losses in miners as investors saw profit taking opportunities.
At 0819 GMT, the FTSE 100 was down 14.37 points at 4,932.97, after closing 14.16 points higher at 4,947.34 on Tuesday as stocks were supported by M&A activity and surging commodity prices.
The index is up 43 percent since its year low in March. However, it remains 8.7 percent shy of its level prior to the collapse of Wall Street firm Lehman Brothers a year ago, which jolted financial markets worldwide.
Miners were the top fallers on the index, as the price of gold threatened to fall back below the $1,000 ounce.
Eurasian Natural Resources, Rio Tinto, Xstrata and Randgold Resources fell 2.5-3.5 percent.
Lonmin dropped 2.6 percent as Merrill Lynch downgraded the company to 'neutral' from 'buy', with the broker citing its recent price surge on the back of M&A speculation with Xstrata, which it says is far from a sure thing.
With Asia softening overnight, Stephen Pope, chief global strategist at Cantor Fitzgerald, said this was a perfect time for investors to book profits before bulls gear themselves up for another charge.
"There's no harm in taking some money off the table. We're seeing a little bit of short-term profit taking before going higher again," said Pope. "I just do not see that this market wants to go down. The downside risk is very limited at the moment."
Giving further impetus to the bulls, Britain's recovery prospects were brightened by survey results on Wednesday.
CONFIDENCE GROWS
The Nationwide Consumer Confidence index rose to 63 in August from an upwardly-revised 61 in July to the highest since May 2008, reflecting Britons' more upbeat view on current and future conditions as well as a greater willingness to spend.
A separate survey by the Recruitment and Employment Confederation and accountants KPMG showed the number of job appointments rose last month for the first time in over a year.
Banks were again in the focus of the bears as uncertainty over new rules to reshape the global financial system to prevent another Lehman Brothers-style collapse, extending the losses from the previous session.
HSBC, Barclays and Standard Chartered and Lloyds Banking Group shed 0.1-0.7 percent.
Confectionery group Cadbury was 0.2 percent lower. Its shares have rocketed over the past two days after it rejected a 10.2 billion pounds ($16.9 billion) bid from North America's biggest food group Kraft on Monday.
More news filtered through overnight of a possible hostile bid by Kraft, while the Times newspaper reported that U.S. chocolate group Hershey Co had appointed JP Morgan to advise on its options as it considers a counterbid for Cadbury.
Ex-dividend stocks: BHP Billiton, Capita, Friends Provident , Legal & General, Serco and TUI Travel hung around the $71 a barrel level, having gained $3 dollars in the previous session, ahead of the OPEC meeting that began on Wednesday.
BG Group, Cairn Energy and BP climbed 0.2-1.5 percent.
Real Estate stocks gained on the burgeoning confidence. Hammerson, Land Securities and British Land added 1.4-2.7 percent.
On the economic data front, investors will eye trade balance data for July, due for release at 0830 GMT, to gauge the impact the emerging recovery is having on the British economy.
