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.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here