Housebuilders were under pressure Wednesday following the publication of another gloomy industry survey.
Persimmon fell 2.6 per cent to 726p and Taylor Wimpey lost 2.7 per cent to 173.1p after the survey from the Royal Institution of Chartered Surveyors showed that the stock of unsold property on surveyors' books jumped more than 10 per cent in January.
Barratt Developments, which was removed from the FTSE 100 in December, drifted 1 per cent lower to 398p as traders worried about a looming refinancing.
Barratt needs to pay back £800m of debt it took on to fund the £2.1bn acquisition of Wilson Bowden in April.
One rumour Wednesday was that Barratt would look to do so through a rights issue.
But analysts dismissed this, pointing out that Barratt had an option to roll over the debt facility for a further 12 months and would probably do so even if it meant paying a higher level of interest.
They noted that Barratt was cutting back on land purchases, a move that would help reduce borrowings, which stood at £1.7bn at the end of December.
Barratt reports half-year results on February 27.
The FTSE 100 closed 29.9 points, or 0.5 per cent, lower at 5,880.1 as investors moved to lock in profits made during Tuesday's big rise. The FTSE 250 eased 44.1 points, or 0.4 per cent, to 9,996.1.
British Energy bucked the downward trend, climbing 9 per cent to 533p after third quarter results beat expectations by 10 per cent and the nuclear power company announced that it would pay an additional dividend of 14.5p a share.
British Energy also confirmed that reactors at Hartlepool and Heysham 1 were on course to return to service later this year.
Cadbury Schweppes (NYSE:CSG) improved 1 per cent to 593½p after JPMorgan said the share price did not reflect any take-out potential.
After the demerger of its US soft drinks business, Cadbury will be the only listed global confectionery company and, therefore, according to JPMorgan, a "unique consolidation opportunity".
Cadbury is expected to provide more detail on the spin-off of the fizzy drinks business when it reports results on Tuesday.
Man Group, the hedge fund manager, added 4 per cent to 579½p as traders reacted to Tuesday's late news that the value of its flagship AHL fund had risen 1 per cent last week, outperforming the FTSE 100, which fell 5.3 per cent.
In the banking sector, specialist mortgage lender Bradford & Bingley slumped 23.1 per cent at 187p after reporting disappointing full-year results and revealing £226m of one-off charges.
Citigroup, joint house broker, responded to the figures by lowering its estimate of B&B's tangible book value to 188p.
That unsettled the rest of the sector. Alliance & Leicester dropped 7 per cent to a seven-year low of 559p, while HBOS slipped 1.2 per cent to 665p and Royal Bank of Scotland dipped 1.3 per cent to 369¼p.
Barclays (NYSE:BCS), off 0.4 per cent at 453¾p, is the next bank to report annual results on Tuesday.
BT Group dipped 2 per cent to 226p as investors continued to worry about its pension fund.
BT's pension deficit could balloon to £4.6bn from £400m if it were required to report its retirement liabilities and assets under rules recently proposed by the Accounting Standards Board.
Xstrata fell a further 1 per cent to £37.80 as traders gave up on the idea of Vale of Brazil paying a large premium for the miner.
The talk was that a delegation from Vale was in London on Wednesday speaking to advisers about the level and structure of any formal offer for Xstrata.
Of mid caps, Punch Taverns remained in focus after QVT, the US hedge fund, increased its holding to 7.7 per cent.
QVT is believed to be against Punch's plan to buy rival Mitchells & Butlers.
Punch shares eased 0.9 per cent to 635½p while M&B fell 0.8 per cent to 451p.
Since Punch announced its interest in acquiring M&B, its shares have fallen 10 per cent. An indication that the deal is off could see Punch shares rally 4-5 per cent, according to traders.
Separately, HSBC declared a raised holding in M&B of 10.2 per cent, up from 6.1 per cent.
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