A four-day rally by Britain's top shares came to an abrupt halt on Wednesday as investors were rattled by the threat that higher US interest rates could choke off economic recovery.
Reuters Group led blue chip fallers, with a 5.9 percent drop, after the news and information company reported a marked slowdown in the decline in its main revenue stream, but gave a guarded outlook, saying it was not yet ready to "break out the champagne".
But food and consumer products giant Unilever rose 2.7 percent after bullish guidance from Swiss rival Nestle lifted hopes for strong growth, especially in emerging markets.
The FTSE-100 share index closed down 29.1 points, or 0.6 percent, at 4,539.9, pulling back from Tuesday's highest close for 21 months and clipped some of the 1.9 percent it gained in the previous four sessions.
Mining, banking, oil and media sectors led a broad-based decline after US Federal Reserve Chairman Alan Greenspan said the US economy had entered a period of more vigorous growth that may require higher interest rates.
"Until the market has been able to adjust to how much the Fed is going to be moving rates and how quickly, there is a period of uncertainty," said Andrew Bell, strategist at investment managers Carr Sheppards Crosthwaite.
But Bell added: "I would be more unnerved if US rates were still at one percent at the end of the year, as that would be telling me that the Fed is taking a risk with inflation, or that growth has disappointed in the meantime."
Greenspan's comments overshadowed news that only one of the nine Bank of England policymakers voted to raise interest rates this month, damping the threat of a UK rate rise next month, and strong US earnings, notably from Motorola and Ford.
Miners sagged as fears that a rate rise would choke economic growth coincided with news of a fall in refined copper production at Rio Tinto and a profit warning from AngloGold, part-owned by Anglo American. Rio fell 4.3 percent, Anglo lost 4.9 percent, and Xstrata, Antofagasta and Lonmin all shed over four percent.
British Airways lost 4.4 percent after budget airline Ryanair predicted no cease-fire in the European fares war on Tuesday, violence continued in Iraq, and US rival Northwest highlighted the negative impact of high fuel costs.
BAE Systems and Hanson both lost over three percent, and midcap printer St. Ives lost 5.8 percent as they were among stocks to start trading ex-dividend, meaning new investors will not qualify for the next payout.
Recruitment firm Hays shrugged off the impact of trading ex-dividend and added 1.4 percent after UBS upgraded the stock to "buy".
Drug stocks were firm after US giant Pfizer reported a surge in revenue, helping GlaxoSmithKline end up 1.7 percent.
But midcap oil and gas firm Premier Oil tumbled 8.5 percent to 523-1/2 pence in the wake of disappointing drilling results. An inconclusive result on its Sinapa well on Tuesday prompted brokerage Oriel Securities to cut its rating to "hold", while Canaccord Capital trimmed its price target to 595p from 613p, citing last week's "disappointing" Criollo well drill.
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