Britain's top share index was 0.1 percent lower in early deals on Tuesday as weakness in banks and in Tesco after disappointing Q3 numbers offset a rally by oil majors, with investors overall happy to hug the sidelines.
By 0911 GMT, the FTSE 100 index was 2.80 points lower at 5,307.86, after closing down 11.70 points, or 0.2 percent on Monday, consolidating around the 5,300 level.
Volumes were thin with investors cautious ahead of the pre-budget report, due on Wednesday, and the Bank of England's policy meeting on Thursday.
"It's another lacklustre start to the day especially as Tesco third-quarter results fail to inspire," said Sam Wright, equity trader at Spreadex.
Tesco shares shed 2.1 percent as the world's third-biggest retailer said sales at British stores open at least a year rose 2.8 percent, excluding petrol and VAT sales tax, in the 13 weeks to Nov. 28.
That was slightly down on the 3.1 percent reported in the second quarter and shy of the average forecast of 3 percent in a Reuters poll of 12 analysts.
Other food retailers fell back on the news, with Sainsbury shedding 0.5 percent and Wm. Morrison Supermarkets losing 0.8 percent.
Retail sales values rose at their slowest annual pace last month since August, held back by food sales where a fall in inflation led to their weakest performance in more than two years, a British Retail Consortium survey showed.
Weakness in banking issues was the biggest drag on blue chip sentiment on fresh concerns over their exposure to Dubai's debt problems and worries about a likely windfall tax in Wednesday's pre-budget report.
Royal Bank of Scotland, HSBC, Barclays, and Standard Chartered shed 0.5 to 1.8 percent.
But Lloyds Banking Group managed to rally 1 percent higher after recent falls.
State-controlled Dubai World is discussing with its bank creditors a new date for $3.5 billion in debt maturing on Dec. 14, a Dubai newspaper reported, citing British bankers.
XSTRATA DENTED
Xstrata headed a mostly weaker mining sector, down 1.2 percent after the firm said it is taking a $1.9 billion charge for restructuring its nickel business after metal prices fell, and is taking further charges of $545 million for copper smeltering operations in Canada and Chile.
Peers BHP Billiton, Rio Tinto, and Eurasian Natural Resources shed 0.4 to 0.6 percent.
But gold miner Randgold Resources added 1.2 percent as the price of the yellow metal recovered some recent falls as the dollar dipped, following comments from Federal Reserve chairman Ben Bernanke.
Bernanke said the U.S. economy's recovery remained fragile and unemployment could remain elevated for some time, cooling anticipation of an early increase in U.S. interest rates.
Media group Pearson was the top FTSE 100 riser, up 2 percent after U.S. peer McGraw-Hill said it expects a better year for all businesses in 2010. Shares in WPP, the world's largest advertising group, added 0.8 percent, and BSkyB gained 1.7 percent.
Oil majors also gave support to the blue chips as the price of crude held steady, with BP and Royal Dutch Shell up 0.9 and 0.1 percent respectively.
Drug and tobacco stocks were wanted for their defensive attractions, with British American Tobacco up 0.7 percent and GlaxoSmithKline ahead 1 percent.
On the data front, house prices rose 1.4 percent month-on-month in November, according to the latest survey by the Halifax, much stronger than the 0.5 percent rise predicted.
British industrial production and manufacturing output numbers for October are scheduled for release at 0930 GMT.
And the Confederation of British Industry (CBI)'s industrial trends report for December is due out at 1100 GMT.
