LONDON (AFP) - The FTSE 100 ended the session weaker, hit by mixed trading in New York and a bleak performance in financials, dealers said.
At the close of trade, the FTSE 100 was down 24 points at 4,568.3, with 2.7146 billion shares changing hands in 212,446 deals.
Vodafone was the most traded stock, with 216 million shares being exchanged, followed by Pearson in which 89.9 million shares were traded.
The broader FTSE indices were also weak.
On Wall Street, the DJIA fell 36 points to 10,073.6, though the Nasdaq composite nudged up 6.17 points to 1,891.88.
A slight easing of the oil price helped temper weaker-than-expected news on the employment front, dealers said.
Initial jobless claims rose by 14,000 to 350,000 in the US last week, largely because of Hurricane Ivan.
Economists were expecting an increase to about 340,000, according to a survey conducted by CBS MarketWatch.
In London, financials were led lower by Barclays -- down 4.50 percent at 520 -- after the bank announced it is in talks about a possible recommended partial offer for a majority stake in South Africa's fourth largest bank ABSA.
Elsewhere, Amvescap fell 7-3/4 to 302 after Bear Stearns cut its rating on the fund manager to 'peer perform' from 'underperform', while Man Group -- down 38 pence at 1,223 -- continued to suffer from Morgan Stanley's downgrade Wednesday.
Shell also weighed heavily, following a raft of downbeat comments on the group's strategy update Wednesday.
Deutsche Bank cut its rating on the stock to 'hold' from 'buy' and downgraded its recommendation on the oil majors to 'neutral'.
Shell declined 11-1/4 pence to 406-3/4.
Meanwhile, on the upside, Gallaher led the way rising 3.21 percent to 643-1/2 and Imperial Tobacco rose 12 pence at 1,220.
British American Tobacco was Thursday's second biggest riser, adding 1.55 percent to close on 817-1/2 pence per share.
mmO2 was also a bright spot as speculation swirled that Telefonica could be lining up a bid for the British telco after the Spanish group placed 38 million shares in Pearson at 606 pence per share.
However, some dealers were sceptical of a deal, and argued Telefonica is more likely to use the proceeds of the sale to pay down debt or buy up Telefonica Moviles minorities.
Shares in mmo2 rose 1-1/4 pence to 95, while Pearson fell 15-1/2 to 607.
Positive broker comment supported shares in Smiths Group -- up 9-1/2 at 739-1/2 and Tesco -- up 1-1/2 at 285.
Both Lehman Brothers and Citigroup raised their price targets on Smiths, following strong full year results from the aerospace group.
Citigroup also heaped praise on Tesco, after TNS data showed Tesco appears to be the long term winner in the battle of the supermarkets.
Back in negative territory, Reuters was the second biggest FTSE 100 faller, shedding 3.86 percent to 317-1/4 after Morgan Stanley cut its price target to 335 pence from 345 pence and reduced earnings forecasts for the media group.
Among midcaps, Invensys was the subject of renewed bid speculation, with German group Siemens once again named as the likely predator.
Invensys rose 0-1/2 pence to 13-3/4, amid heavy volumes.
On the downside, Countrywide shares topped the FTSE 250 losers board, down 37 pence at 285 after the group warned on full-year profits.
The bad news from Countrywide and a profit warning from small cap peer Countryside Properties sent the mid cap housebuilders all lower.
easyJet shed 117 pence to 128, as analysts continued to advise caution after the group's trading statement.
The low-cost airline upped its current year profit forecast and, as expected, cut its capacity guidance for 2005.