THE FTSE 100 closed down 0.3 per cent or 16.37 points at 5,985.70 today, under a cloud as EU finance ministers gathered to discuss changes to the eurozone’s bailout fund, and weighed down by miners and banks.
Trading was also lacklustre as US markets were closed for the Martin Luther King Jr day holiday.
Merger and acquisition moves boosted trading at points, however, with Smiths taking the top spot, up 7.7 per cent, after the engineering firm rebuffed a £2.45bn bid for its medical unit.
Artificial knee and hip maker Smith & Nephew also rose 3.5 per cent following a weekend report that Johnson & Johnson was considering a fresh takeover approach worth at least 800p a share, valuing it at £7.1bn.
BP edged up 0.2 per cent, outperforming sector peers, as investors and analysts gave a cautious welcome to its share swap and Arctic exploration deal with Russia's Rosneft, saying any return is likely a long way off.
And Vodafone added 1.8 per cent as investors awaited a deal for the British mobile operator to dispose of its 44 per cent stake in French mobile operator SFR for €7-8bn (£6-6.7bn).
Among the fallers, miners Fresnillo (down 3.55 per cent to 1,439p) and Kazakhmys were out of favour amid lower metals prices after China increased reserve requirements for banks in an attempt to curb inflation.
Banks fell as investors locked in profits from a sector that has enjoyed a good start to 2011 despite Europe's sovereign debt problems lingering in the background. Lloyds was down 2.17 per cent to 68.10p.
Fund manager Schroders lost ground after UBS downgraded the stock to "neutral" from "buy".
The concerns surrounding Apple's chief executive Steve Jobs caused its supplier ARM Holdings’ share price to fall three per cent.
Jobs is taking his third period of medical leave two years after a six-month break for a liver transplant.
Autonomy shed 5.1 per cent, the worst performing FTSE 100 stock, after Standard and Poor's equity research said a lack of a positive pre-announcement does not bode well for the British software firm's fourth-quarter results.
And engineer Weir Group shed 2.8 per cent, with traders citing talk of a potential bid for Swiss rival Sulzer.