Britain's top share index was 0.2 percent lower early on Wednesday, with a retreat by banks countering gains by miners and Vodafone, as investors paused for breath after sharp gains in the previous session.
By 0907 GMT, the FTSE 100 index was 10.08 points lower at 5,302.09. It closed 121.49 points, or 2.3 percent higher on Tuesday, its biggest one-day gain in over four months as worries over Dubai's debt problems receded.
"After Tuesday's bounce back it's no real surprise that investors are taking a breather today with little about to inspire fresh direction," said Mic Mills, senior trader at ETX Capital.
"All eyes now focused on Friday's U.S jobs report as the Dubai drubbing fades into the memory."
Banks retreated after a good rally on Tuesday on the ebb and flow of Dubai debt exposure and with bonus payment concerns.
Britain's Treasury looked set to clash with institutional investors in Royal Bank of Scotland after it took control of the bank's bonus pool, The Times reported.
Royal Bank of Scotland, Barclays, HSBC, Lloyds Banking Group , and Standard Chartered shed 1.2-2.9 percent.
Severn Trent was the top FTSE 100 faller, down 3 percent as the stock traded ex-dividend on Wednesday.
Overall, ex-dividend factors took 2.39 points off the index with AB Foods, Johnson Matthey London Stock Exchange, National Grid, and SABMiller all also losing their payout attractions.
MINERS WANTED
Miners found fresh support after strong gains on Tuesday with base metals firmer and gold hitting a record high above $1,200 per ounce, boosted by a weaker dollar.
Broker comment also provided support. Vedanta Resources added 2.7 percent as Goldman Sachs raised its rating to 'buy' from 'neutral' in a review of the European metals and mining sector. The broker downgraded its stance on Anglo American to 'neutral'.
Platinum miner Lonmin added 2.8 percent as Investec raised its rating to 'buy', with the broker upping its target for mid cap Aquarius Platinum, ahead 3.4 percent.
Eurasian Natural Resources gained 2.3 percent, helped by a recent upgrade from Credit Suisse, while Randgold Resources, Rio Tinto, Anglo American, and Kazakhmys took on 0.2-1.3 percent.
Kazakhmys has cut costs by 20 percent since January and might end the year below its forecast cost range, finance director Matthew Hird said on Tuesday.
Mobile telecoms heavyweight Vodafone added the most points to the blue-chip index, up 1.8 percent as Credit Suisse hiked its target price to 160 pence from 150 pence.
Oil services firm Amec rose 0.8 percent as Evolution Securities upped its rating to 'buy' from 'add'.
Publisher Reed Elsevier gained 1.5 percent benefiting from its inclusion in a UBS key call list in a 2010 strategy review.
Both UBS and ING were optimistic for the prospects for European equities in 2010, citing an upturn in the economic cycle, but both said defensive sectors would outshine cyclyical sectors like technology and financials.
Defensive sectors such as pharmaceuticals, food producers, and tobaccos gained, with British American Tobacco, Unilever and AstraZeneca up 0.3 to 1.1 percent.
