After a strong rise on Monday, London shares slipped back.

Investors took profits after a large rally in stock values over the past few weeks.

The City was gripped with merger fever on Monday after a succession of big corporate deals pushed prices upwards.

The FTSE 100 index of leading shares had fallen 57.6 points to 5790.8 by 1100 GMT.

"We have had a very strong run against a background of gloomy corporate news and real economic uncertainty. I don't think the UK market is going to push to new highs like Wall Street did overnight," said one dealer.

Shares in music giant EMI slipped after disappointing results.

The UK's second largest tour operator, Airtours, announced a sharp rise in profits but its shares fell in early trading.

Media group Pearson's shares also fell on news that a $860m deal to sell two publishing businesses to a US venture capitalist had collapsed.

The FTSE 100 finished 130.9 points, or 2.3%, higher at 5848.4 on Monday.