London shares continued to slip despite overnight respite from both Wall Street and Tokyo's Nikkei index.

The continued decline followed Tuesday's freefall when the FTSE 100 index of leading shares lost £36.1bn in value - its third biggest ever points fall.

After a cautious rally of around in the opening minutes, the Footsie had fallen 10.2 points to 5527 by 1300 GMT as dealers continued locking in last week's profits.

Trading was very thin despite firm European markets and a rally on the Nikkei and Hang Seng indices and a minor gain on Wall Street.

"Just because Wall Street closed steady we won't necessarily have a steady day today - that's the feeling," said one senior equity salesman.

A profits warning from Boeing hit engineering stocks, with aero-engines maker Rolls-Royce and British Aerospace both slipping.

Some confidence returned to financial stocks.

Allied Zurich, the insurer, Amvescap, Barclays and Royal Bank of Scotland all edged up.

Among smaller stocks, a clutch of corporate announcements kept analysts busy.

There was news that Belgian group Etex is to rescue building supplies group Marley from a hostile bid by Mansfield.

Belgian group Etex is offering 125p a share for the company, lifting Marley.