SHARES in construction firm Balfour Beatty fell sharply as rival Carillion admitted defeat in its pursuit of a £3 billion merger, after Balfour rejected a last-ditch offer to keep the deal alive.
Carillion said it was "no longer pursuing" a deal, after Balfour refused to extend a "put up or shut up" deadline - part of takeover rules - that will be reached at 5pm tomorrow.
It came as the wider market headed lower, with the FTSE 100 Index down 23.8 points to 6755.5, while Germany's Dax and France's Cac 40 also fell. In New York the Dow Jones Industrial Average was up at the close of the London market.
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The declines follow two days of increases on the back of positive US economic figures and easing fears over the Ukraine crisis.
Sentiment was not helped by the release of Bank of England minutes disclosing that two members of the Monetary Policy Committee voted for an interest rate hike this month.
The feeling that this reopened a slight possibility of a rise by the end of the year gave sterling a boost, as it climbed a cent against the single currency to just over 1.25 euros and also rose versus the greenback, at just over 1.66 US dollars.
In equities, Balfour Beatty was the biggest faller on the FTSE 250, falling 17.1p to 238.9p after its third rejection of the merger which later collapsed, while Carillion, also on the FTSE 250, lost 6.7p to 330p.
Standard Chartered was among the risers in the top flight, despite its $300 million (£180m) penalty from US regulators over a finding that it failed to fix compliance problems against money laundering required under a previous settlement.
The bank said it regretted "deficiencies" in its systems and said it was seeking to remedy these "with utmost urgency".
Investec analyst Ian Gordon said the fine "appears to be very high in relation to its alleged failings" but it was shrugged off by investors as shares climbed 3.5p to 1221p. "Evidently the $300m price is seen as something of a bargain by investors in the stock," said Tony Cross, market analyst at Trustnet Direct.
Elsewhere, commodities giant Glencore was in focus as it reported an 8 per cent rise in earnings to $6.46bn for the first half and announced a share buyback programme of up to $1bn.
The stock was buoyed by the update, edging 1.6p higher to 360.5p.
However, BMO analyst Tony Robson said the share buyback looked small given the $6.5bn gained from the sale of the Las Bambas copper project in Peru.
The biggest risers on the FTSE 100 Index were United Utilities up 14p at 890p, Royal Mail up 6.9p at 445.7p, Rio Tinto up 43.5p at 3458p and AstraZeneca up 46.5p at 4285p.
The biggest fallers on the FTSE 100 Index were CRH down 55p at 1373p, 3i down 10.4p at 381.6p, Barratt Developments down 9p at 359.6p and Associated British Foods down 69p at 2826p.