UK stock closing: Big falls by temporary power firm Aggreko and market heavyweight Vodafone weighed on Britain's top shares on Monday as the final full trading week of 2012 got off to a lacklustre start.
Aggreko was the biggest percentage blue chip faller, dropping 22 percent after the firm issued its second profit warning in two months, saying there would be less need next year for its generators.
"Aggreko shares now trade just above 52-week lows, crossing beneath its 200-DMA (day moving average) without any major support as investors remain bearish on the stock," Rik Thakrar, risk manager and senior dealer at Spread Co. said.
"The dealing floor has noted a flurry of short selling activity in the stock, with traders viewing current lower levels as a consolidation point ahead of further falls throughout early 2013," Thakrar added.
Volume in Aggreko shares was the biggest on the blue chip board at over nine times its 90-day daily average.
Overall FTSE 100 volume was relatively thin at about three-quarters of the already low 90-day daily average as the festive lull approached.
Volume was also strong in Vodafone, at 160 percent of its daily average, as the mobile phone firm's stock shed 1.7 percent, accounting for over 5 points, or around half of the FTSE 100 index's total decline.
Vodafone suffered after the Dutch state raised much more than expected in its auction of fourth generation (4G) frequencies, pointing to higher costs for operators.
"Friday's Dutch spectrum auction results took the market by surprise with total proceeds 2.6 times higher than anticipated and Tele2 bidding aggressively to secure all new entrant spectrum," JPMorgan Cazenove said in a note.
"This will raise concerns around the Dutch mobile market outlook, which we believe is negative for all operators."
Prices in the spectrum auction were so high that market leader KPN said it would have to cut dividends to afford its licences. KPN shares dropped 15 percent in Amsterdam.
In London, the FTSE 100 closed down 9.61 points or 0.2 percent at 5,912.15, albeit bouncing off session lows below the psychologically important 5,900 late in the afternoon as Wall Street put in a firm early performance.
U.S. blue chips were 0.7 percent higher by London's close as investors eyed signs of movement in key budget talks.
Republican House Speaker John Boehner edged closer to Democrat President Barack Obama's key demands in negotiations to avert the "fiscal cliff" of tax hikes and spending cuts set to take effect by Dec 31 unless Congress intervenes.
"U.S. lawmakers have this week left to dig in their heels and flesh out a deal otherwise it is unlikely the FTSE 100 will be sitting above that 5,900 level by the end of the year," Ishaq Siddiqi, market strategist at ETX Capital said.
Strength in miners helped limit the blue chip falls, adding over 8 points to the index, with the sector supported by improving data from top metals consumer China, following a year of underperformance which has seen the sector fall 1.6 percent compared with the FTSE 100's 6.3 percent rise.
"Materials is the only cyclical sector to have underperformed so far in 2012 and hence could be a key beneficiary of the 'January' effect in 2013," they add, reiterating a preference for mining, and pointing to a recent trend where the worst performers of the prior year have triumphed in January.
Airlines owner IAG was the top FTSE 100 gainer, up 3.3 percent in strong volume of 140 percent of its 90-day daily average, after its Spanish unit Iberia said it had agreed to negotiate with its unions over a five-year restructuring plan to ensure the airline's future viability.