LONDON (AFP) - Leading British shares ended the session lower as profit warnings from consumer good groups Unilever and Colgate-Palmolive and the rise in the price oil spooked investors on both sides of the Atlantic, dealers said.
At the close on Monday, the FTSE 100 index was down 11.5 points at 4,579.5, with the broader indices all in the red.
Volume was moderate, with 2.05 billion shares changing hands in 184,468 deals. Volume was swollen by BP (267 million shares) and Vodafone (108 million shares).
In New York, stocks lost ground as the market fretted over a spate of profit warnings led by Colgate and Unilever, with a fresh rise in oil prices further undermining sentiment.
By London's close, the Dow Jones Industrial Average was 57.30 points lower at 10,227.40 with traders also cautious ahead of the FOMC meeting Tuesday.
Back in London, Unilever topped the FTSE fallers board, slumping after the Anglo-Dutch consumer group slashed its full-year profit forecast after poor European weather, weak consumer demand and pressure from rivals hit sales of ice cream, soft drinks and detergents.
The maker of Ben and Jerry's ice cream, Lipton ice tea, and Surf washing powder expects to grow earnings per share by less than 5 percent, having as recently as July forecast low double-digit EPS growth.
In response, Panmure Gordon cut the stock to 'hold' from 'buy, saying confidence is "very low" in the management's ability to achieve a significant improvement in top line performance.
Unilever fell 22-1/2 pence at 459-1/2.
Pharmaceuticals group Smith and Nephew was the second biggest faller, shedding 2.42 percent to finish on 484 pence.
Sentiment in the sector was further hit by Colgate's warning in the US that earnings for the second half of the year would be short of expectations.
Reckitt Benckiser dropped 21 at 1,411 pence in sympathy, despite the group reiterating guidance for the full year in the aftermath of the Unilever and Colgate news.
Cadbury Schweppes was 6-1/2 lower at 432-1/2 and AB Foods 5-1/2 lower at 652.
Meanwhile downbeat comments on hair care products from Unilever also hit Boots, down 16-1/2 at 679-1/2.
Chemicals were also weaker, hit by rising oil prices and bearish broker comment on ICI.
Lehman Brothers reiterated its 'underweight' recommendation on ICI, highlighting concerns over the group's potential pension liabilities. ICI was 5 lower at 211-1/2.
Retailers were also knocked amid trading worries in high street stores Dixons and Marks and Spencer.
Dixons fell 3/4 pence at 166 after SocGen downgraded the group to 'sell' on concerns British retail sales in the second half of the year could disappoint.
Marks and Spencer were 4-3/4 lower at 345-1/2 on expectations the retail giant will tomorrow reveal poor second-quarter sales along with the terms of its 2.3 billion pounds tender offer.
Weekend reports suggested M-and-S experienced a double-digit decline in clothing sales in July and the first two weeks of August. However, most suggested a pick-up in the latter weeks of August.
On the upside, rising crude prices boosted oil stocks BP and Shell, as traders fretted over the closures of refineries after the havoc wreaked by Hurricane Ivan.
BP rose 9 pence to 528-1/2, while Shell was up 5 to 422-1/2 -- the top two blue chip risers.
Shell is also due to publish a strategy update on Wednesday.
Intercontinental Hotels put in an upbeat performance -- up 1/2 pence to 646-1/2 -- after Citigroup upgraded to 'buy' from 'hold', to reflect the likelihood of a dynamic restructuring process.
The broker also raised its price target to 720 pence from 580 pence, and said it currently values completion of restructuring at 777 pence.
Defensive qualities helped Severn Trent nudge 1 higher at 849 and Scottish and Southern 1-/2 higher at 755-1/2.