Britain's top share index fell 0.5 percent in early trade on Tuesday, dragged lower by miners, as metal prices fell, and by banks after analysts cautioned over the sector's funding position.
By 0921 GMT, the FTSE 100 was 17 points lower at 5,589.72, having ended 0.1 percent higher on Monday, its highest close since 2 Sept. 2008 — before the collapse of Lehman Brothers.
"There's little in the way of data to guide investors, and with volumes slowing and overnight markets mixed, the temptation may well be to sit on the sidelines and watch as the latest rally runs out of steam," said James Yates, head of equities at CMC Markets.
Miners fell back after recent strong gains and as metal prices faltered on concern over faltering demand from China.
Rio Tinto, BHP Billiton, Fresnillo and Lonmin fell 0.1 to 1.1 percent.
Chilean copper miner Antofagasta shed 1.4 percent after reporting a fall in earnings per share excluding exceptional items 67.7 cents, on 12 percent lower revenues.
Banks extended Monday's losses. Moody's Investors Services said British banks and lenders that have not improved their funding position may have their financial-strength ratings cut as government support for the industry is withdrawn.
Credit Suisse also issued a cautious note on UK banks. Barclays, Lloyds Banking Group and Royal Bank of Scotland were down 0.3 to 2.1 percent.
HSBC and Standard Chartered Bank fell 0.5 and 1.4 percent respectively.
Imperial Tobacco dropped 1.6 percent as UBS cut its rating to "sell" from "neutral". British American Tobacco dipped 0.5 percent.
Britain's biggest mall owner Liberty International (LII.L) was the top blue chip faller, down 4.1 percent after it unveiled plans for a demerger, which it said will enhance shareholder value, as it posted a 38 percent fall in full-year 2009 net asset value.
Satellite communications firm Inmarsat (ISA.L) fell 2.1 percent as the firm reported an 18 percent rise in fourth-quarter earnings, with the stock having had a strong run ahead of the numbers.
ENERGY, DEFENSIVES HIGER
Energy stocks moved higher, extending the previous session's rally as crude hovered around $82 a barrel, near its highest level this year.
BG Group, Royal Dutch Shell and BP rose 0.2 to 0.7 percent.
Defensive issues rose as investors opted for less risky assets.
Drugmakers, some of Monday's biggest fallers, rebounded. AstraZeneca and GlaxoSmithKline added 0.2 and 0.7 percent, respectively.
Drinks firms Diageo and SAB Miller both gained 0.4 percent.
International Power rose 1.6 percent after it beat forecasts with a 10 percent rise in 2009 profits on strong demand for power in Asia and Australia.
UK economic data released overnight was mixed.
The Royal Institution of Chartered Surveyors said overnight the British house prices grew last month at their slowest pace since August after the amount of new property coming on to the market grew faster than the number of new buyers. Meanwhile, British retail sales recovered last month from January's snow-related slide, helped by strong sales of clothing and footwear, a survey by the British Retail Consortium found.
Investors will eye January British trade numbers, due at 0930 GMT on Tuesday.
