Trading on Tuesday was very thin, and blue chips nursed limited losses as dealers looked to the Wall Street opening for fresh impetus.

April's consumer credit figures came in below expectations at £866m, compared to £1.4bn in March and expectations of £1bn, easing fears of an interest rate rise when the Bank of England's Monetary Policy Committee meets later this week.

Nonetheless, at 13:42 the FTSE 100 was down 17.4 with a volume of 458m shares.

"The main talking point has been the lack of institutional participation," said one trader from a UK broker. "Asia, together with this week's UK rate decision and Friday's US payrolls data, has pushed many investors to the sidelines," he added.

National Grid rose 5.6% after confirming it was interested in buying a US utility. Nycomed was also marked up after CSFB turned changed its recommendation from "sell" to "hold", dealers said.

Siebe remained under pressure from profit-taking in the wake of results which met market expectations.

Thames Water was initially down despite news that its project in Indonesia to supply water to Jakarta may be resumed, but later its share price recovered.

Vodaphone went up on news that profits were higher than expected, after midday trading at 704, up 16p.

Zeneca, whose price has been rising on bid speculation, fell back 51p to £24.94 following the announcement of the merger between American Home Products and Monsanto in the US last night.

Among smaller companies, Filofax was down 10% on news that discussions on a possible major alliance have been terminated.