London shares were in volatile mood, vacillating between negative and positive territory for most of the morning.

By 1100 GMT shares were down 2.8 points to 5873.7 pulled lower by a 2.6% overnight fall in Tokyo.

The downturn followed the FTSE 100's 6% rise in five days, which had caught investors off-guard.

"It took a lot of people by surprise and market makers will have been left short of stock in the middle of their year-end book squaring," said one senior equity salesman.

Among coporate winners, Unilever rose 1.3% despite news that Britain's ice cream industry will be investigated by the Monopolies and Mergers Commission.

Shares in SmithKline Beecham rose 3.1% after a vaccine for Lyme disease was approved by the US Food and Drug Administration.

Ladbroke gained 5.3% after investors welcomed the sale of its betting shop chain Coral to a company backed by Morgan Grenfell Private Equity for £390m.