Engineering firms led London's top-flight lower after a profit warning from FTSE 250-listed Rotork weighed on a clutch of its blue-chip rivals.

The FTSE 100 Index finished 42.2 points down at 6187, following a sharp 92-point rise in the previous session, with investors cautious as they weighed up the chances of central bank rate hike moves.

Germany's Dax and France's Cac 40 were both little changed. On Wall Street the Dow Jones Industrial Average was also initially flat as traders kept their powder dry ahead of a decision on US interest rates by the US Federal Reserve.

The decision, which could see the first hike in rates for nearly a decade, was due after the close of European markets and seen as too close to call.

In the UK there was little to dampen heightened expectations of a Bank of England move on rates coming soon as official figures on retail sales showed a rise of 0.2 per cent in August that was broadly in line with expectations.

It came a day after labour market data showing regular pay rising at its strongest pace in more than six years, together with hawkish comments from Bank of England governor Mark Carney, had helped the pound surge.

Sterling held firm in the latest session, ahead slightly against the US dollar at 1.55 and marginally lower against the euro at 1.37.

In London shares, engineering manufacturer Rotork fell 11 per cent after it warned of a challenging second half trading environment with an increased number of project deferrals and cancellations and a "particularly weak" August.

It warned lower revenues would hit profits. Shares slumped 23.4p to 192.6p.

The update from the group - which has had a tough period recently due to the weakness of the oil and gas sector amid plunging prices - rubbed off on FTSE 100 rivals which also have major revenue streams from the industry.

Smiths Group fell four per cent, or 47p, to 1082p while Weir Group was down 34p at 1284p and Babcock International fell 24p to 929p.

In London shares, Alton Towers owner Merlin Entertainments was in focus after it revealed an 11.4 per cent fall in like-for-like revenues in its theme park division in the 36 weeks to September 5, a period including its major rollercoaster accident in June.

Shares, which have fallen by more than 15 per cent since the accident, at first headed lower but finished little changed, down 0.1p at 382.6p.

Elsewhere, insurance fund consolidator Phoenix Group was 4p higher at 865p after confirming talks over a potential deal to buy smaller rival Guardian Financial Services in a deal that could reportedly be worth more than £1 billion.

The biggest risers in the FTSE 100 Index were Compass Group, up 16p at 1034p, Associated British Foods up 46p at 3184p, London Stock Exchange Group up 30p at 2455p and GKN up 3.3p at 285p.

The biggest fallers in the FTSE 100 Index were Smiths Group down 47p at 1082p, Fresnillo down 16.5p at 590p, Sainsbury's down 6.2p at 225p and Weir Group down 34p at 1284p.