Shares in SABMiller charged 10.6 percent higher on Tuesday boosted by the brewer's prospects in Latin American markets after it bought a Colombian rival, although the overall blue chip market closed lower after a volatile session.
Dealers said last-minute jockeying by institutional investors ahead of first-time dealings at Wednesday's opening in the unified Royal Dutch Shell Plc pulled the market about late in the session as tracker funds in particular adjusted their portfolios.
Oil giant Shell is combining with Dutch sister company Royal Dutch in a move aimed at simplifying the 60 percent Dutch, 40 percent British-owned group's structure and management and in so doing avoid future difficulties such as the recent oil reserves overbooking scandal.
Shell closed 1.7 percent down as buyers adjusted index weightings in the stock, whose unified listing is expected to leapfrog heavyweights including bank firm HSBC and telephone giant Vodafone into second place behind Britain's biggest company. BP has a 10.6 percent weighting in the FTSE 100 and Shell's is expected to go from just under 4 percent to around 10 percent.
The closing auction, when buy and sell prices are automatically matched, was extended by the London Stock Exchange to cope with an anticipated bulge in Shell trading, which approached 230 million shares, well above the 30-day average of 72 million shares. The FTSE 100 index closed 12.7 points down at 5,201.5, breaking step with firmer US and European share markets, and stretching a consolidation from last week's 39-month highs to a third consecutive session.
"The London market has come a long way and it was inevitable that perhaps you were going to see a phase of "steady as she goes" rather than racing away. We're still pretty positive about the global market position," said Henk Potts, equity strategist at Barclays Stockbrokers.
"We think the economic data coming through from the US is very strong, the corporate profits are holding up nicely and the market believes it can see the end in sight in terms of the interest rate increasing cycle in the States," he added.
News that SABMiller is to buy South America's second-biggest brewer Bavaria in a deal worth $7.8 billion sent shares in the UK-listed stock racing to a new high.
"There's a big growth market out there and its traditional markets, whether in Europe or the US, don't have the growth potential of Latin America because ... certainly in (North) America you're finding consumers are preferring to drink spirits and wine instead of beer," said Potts.
"It's a strategically sound deal, they've paid a sensible price and it's a good opportunity for them," said John Smith, strategy director at Liverpool-based fund manager Brown Shipley, which holds SABMiller shares.
Talk elsewhere of a possible bid for France's Danone helped boost stocks across the sector, helping Unilever up 1.4 percent and Cadbury 0.4 percent higher.
Hotels group Hilton featured among the blue chip gainers with a 0.9 percent rise after Goldman Sachs upgraded its stance on the stock to "outperform".
Engineering company Invensys was a top FTSE 250 performer, jumping 10.4 percent after it sold a non-core unit and said the proceeds would help cut debt.
Engineering support services company Babcock International was another midcap charger, climbing 11.3 percent after it announced new contracts and said trading was in line with forecasts.
Matalan climbed 7.3 percent as talk returned of a bid for the discount retailer. Matalan declined to comment.
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