By Atul Prakash
LONDON (Reuters) - Britain's top equity index fell on Tuesday after rising for eight straight sessions to a four-month high, with energy shares losing ground as oil prices weakened and retailer Dixons Carphone (L:DC) slipped after a broker downgrade.
Mid-cap oil producer Afren (L:AFRE) slumped as much as 71 percent and was last down 57 percent, after saying it was in talks with its largest bondholders over its liquidity and funding needs.
The FTSE 100 index (FTSE) was led lower by Dixons, which fell 5.6 percent after Morgan Stanley cut its rating on the stock to "underweight" from "equal weight", saying the shares were significantly overvalued.
The index was down 0.4 percent at 6,822.15 points by 1056 GMT after rising continually for more than a week, mostly on expectations the European Central Bank would begin buying government bonds to stimulate the euro zone economy. The ECB announced such a programme late last week.
Energy shares also put pressure on the FTSE 100. The UK Oil and Gas index (FTNMX0530) fell 1.1 percent, as a stronger dollar caused Brent oil prices to give up early gains and fall below $48 a barrel.
"The FTSE is seeing some profit-taking after a recent run higher, with lower oil prices putting pressure on the market," said Jawaid Afsar, a trader at Securequity. "However, the FTSE 100 is flirting with levels seen last year. Technically, the charts point for an upside break towards the 7,000 level."
The FTSE 100's losses were capped by expectations British interest rates will remain low, after data showed economic growth slowed more than expected in the fourth quarter of 2014.
In addition, budget airline easyJet (L:EZJ) rose 3.6 percent, the FTSE 100's biggest gain, after it said first-half seasonal losses would shrink this year.
International Consolidated Airlines Group (L:ICAG), the owner of British Airways, rose 2.2 percent after the board of Irish airline Aer Lingus (I:AERL) recommended accepting its 1.36 billion-euro (0.99 billion pounds) takeover offer.
The airlines group is up around 80 percent since the middle of August. EasyJet has rallied around 50 percent.
"Airlines have had a great rally and great momentum behind them," said Zeg Choudhry, managing director of LONTRAD. "The numbers for easyJet are good, as a small increase in revenues per seat are a massive boost to their underlying figures, and the market sees IAG's deal with Aer Lingus as very positive."