Britain's top share index was down 1.3 percent early on Wednesday after gaining for six straight sessions, led by miners and banks, but Marks & Spencer rose on relief that its poor trading results were not worse.
By 0839 GMT, the FTSE 100 was down 61.46 points at 4,577.46, after rising 10 percent in the previous six sessions. The UK benchmark, however, had fallen more than 31 percent in 2008, its worst annual performance since its launch in 1984.
Miners came under pressure after a recent rally, with BHP Billiton, Kazakhmys, Eurasian Natural Resources, Vedanta Resources, Antofagasta and Xstrata down between 0.7 and 3.8 percent.
"On the close last night it was the market's best January since 1998, but it is just early days. It probably means it's about to go down," said Darren Winder, equity strategist at Cazenove.
"(The mining sector) is up 20 percent so far this year … Looks more than a little odd with what's clearly a difficult economic outlook."
Britain's Chancellor Alistair Darling said the UK was "far from through" the recession, and that achieving economic recovery was a long way from completion.
The Bank of England began its two-day rate policy meeting on Wednesday and is due to announce its interest rate decision on Thursday. A Reuters poll forecast the central bank would cut rates by 50 basis points to 1.5 percent.
Banks were also big losers, with Barclays, HSBC, Lloyds TSB , Standard Chartered, HBOS and Royal Bank of Scotland down between 1 and 4.7 percent.
In the latest evidence of a deep economic downturn, U.S. Alcoa Inc said on Tuesday it would slash more than 15,000 jobs, halve capital spending and sell four businesses as it reduces aluminium production.
The U.S. operations of LyondellBasell, the world's third-largest petrochemical company, filed for bankruptcy protection under the weight of a massive debt load and falling demand for its products.
STILL SPARKLE
Marks & Spencer, however, advanced 0.8 percent as investors were relieved that the retailer's trading update was not as bad as had been expected.
M&S reported its worst quarterly sales performance for a decade and said it would cut around 1,320 jobs in a bid to save money in a tough trading environment.
"Overall, we see most of this morning's news already being factored into the price, and a small relief rally that we are not seeing a real shock such as a double digit percentage falls in sales, and optimism from the cost-cutting measures," said Martin Slaney, head of derivatives at GFT Markets. Within the retail sector, Next, Kingfisher and Home Retail lost between 0.9 and 2.8 percent.
Bus and train operator FirstGroup fell after going ex-dividend.
