Shares came back down to earth after the meteoric rises of the last three sessions.

The FTSE 100 ended 49.3 lower at 5799.1, having come back from a mid-morning low of 5773.0.

The Footsie gained nearly 400 points in the last three sessions amid hopes of lower interest rates and yesterday's rush of mergers and acquisitions.

It was therefore no real surpise to see the market pull back today, traders said.

Stocks managed a brief rise in morning trade following a firm session in Far Eastern markets.

The FTSE 100 peaked at 5881.7 at 0920 GMT, before the buying evaportated and profit-taking dominated.

"Even after the M&A inspired rises of yesterday, people are still nervous," commented one trader.

"We really need to see some of these 'hoped for mergers' actually come on line."

It was a similar situation in New York, where the Dow pulled back from yesterday's record close, to show a 65-point loss as the London market was closing.

BT shares featured among the fallers, down 3.6%, with the European Union Commission very likely to start an in-depth probe into BT and AT&T's alliance, according to sources.

Royal Bank of Scotland bore the brunt of the profit-taking for the financial sector, down 4%.

Barclays, meanwhile, managed to climb 52p to 1451p.

The paper and packaging sector was lifted by news that US company, International Paper had bought Union Camp, also of the US, in a $6bn deal.

That lifted the shares of Arjo Wiggins, Rexam and Bunzil in London.

BAT added 2.4%, although it finished off earlier highs.