Britain's top shares fell on Monday, retreating from three-year highs as a fresh surge in oil prices unnerved investors, although strength in heavyweight oil firms such as BP and Shell helped cushion the fall.
A hefty rise in Shire Pharmaceuticals provided further support, with shares in the drugmaker topping the list of FTSE risers with a gain of 5.4 percent to 627-1/2 pence after a company it agreed to buy in April released positive clinical trial data, helping to dispel doubts about the acquisition.
The FTSE 100 blue chip index closed down 5.6 points at 5,072.0, easing after Friday's run-up to a three-year closing high.
Market watchers said a spike in oil prices sparked fresh concern that costly energy costs would eat into corporate profits and curb consumer spending. Oil price sensitive stocks were hit, with chemicals firm ICI the top faller with a loss of 2.7 percent and fuel-hungry flag carrier British Airways 1.6 percent poorer. Among mid-caps, no-frills airline easyJet shed 2.2 percent.
"The fears about rising costs because of oil price rises have reared their head again, and with ICI, the stock's had a reasonable rally, so some investors are taking profits," said a dealer.
Gains of more than 0.5 percent in BP, Shell and a 1.5 percent gain in BG Group lent about 6 points of upside to the benchmark index, offsetting a broader market fall that saw about three stocks falling for every stock gaining.
Turnover was low following Friday's surge related to the expiry of derivatives contracts, with only 1.8 billion shares changing hands by 1539 GMT.
"I think there is relatively little upside in the short term," said John Smith, an investment director at Brown Shipley. "But I think the downside is limited. Equities still look attractive compared to bonds and gilts."
Shares in Lloyds TSB dipped 0.4 percent after the company warned of rising bad debts in retail banking but said it expected a satisfactory trading performance for the first half of this year.
"It will be hard for Lloyds TSB to grow the dividend this decade, while RBS will continue its tradition of 15 percent dividend growth," said analysts at Dresdner Kleinwort Wasserstein, who advised clients to switch into rivals Royal Bank of Scotland or HBOS.
Rival Barclays, which fell last month after a similar warning on consumer debts, slipped 0.7 percent. HBOS lost a similar amount, with its purchase of the life insurance unit of German financial services firm MLP on Friday continuing to weigh on the stock.
RBS dipped 0.5 percent after Focus Magazine said the bank wanted to make a counterbid for Germany's HVB to rival the take-over agreed with Italy's UniCredito.
Enterprise Inns fell 1.3 percent, following rival Punch Taverns's 0.9 percent decline after it said late on Friday it faced tough comparisons to a bumper period during the Euro 2004 football tournament last year.
Among blue chips, soft drink and confectionary firm CadburySchweppes firmed 1.9 percent on speculation its soft drink business was being eyed by private equity group KKR, dealers said.
Miners also helped shore up the leading index, with BHP Billiton and Anglo American adding slim gains to track firm prices for metals. Xstrata added 1.3 percent after Deutsche Bank said in a note the coal miner was its top pick in the sector.
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