By Atul Prakash
LONDON (Reuters) - Britain's top share index retreated from a three-week high on Wednesday, halting a five-day winning streak, with companies trading without the attraction of their latest dividend putting pressure on the broader market.
The effect of several major companies, including HSBC (L:HSBA), Mondi (L:MNDI) and British American Tobacco (L:BATS), going "ex-dividend" took about 11 points off the FTSE 100 index (FTSE). Their shares fell between 1.2 and 1.9 percent.
The benchmark index closed down 0.4 percent, or 23.83 points, at 6,755.48 points after gaining for five days in a row and climbing to its highest since late July a day earlier.
The FTSE 100 hit a peak of 6,894.88 points in mid-May, its highest level since December 1999, but has since given up much of that ground.
Investors are concerned that a likely increase in interest rates in Britain would negatively impact businesses and squeeze consumer spending.
Minutes from the Aug. 6-7 meeting of the Bank of England's nine-member Monetary Policy Committee, released on Wednesday, showed policymakers had broken ranks over rates for the first time in three years, with two of them unexpectedly voting to tighten policy.
"It muddies the waters considerably. If it said one member had voted for a rate hike, then we would have got away with it. But now you have got two and it does send a powerful signal," Peter Dixon, equity strategist at Commerzbank, said.
"But the BOE is aware of the fact that domestic demand would be vulnerable in the event of quick rate hikes. It argues for a fairly slow pace of tightening."
UK housebuilders Persimmon (L:PSN) and Barratt Developments (L:BDEV), after gaining in the previous session on hopes that the housing market would be supported by lower rates for longer, slipped 2.0 percent and 2.4 percent respectively.
Hantec Markets analyst Richard Perry said he would look to see if the FTSE 100 could get back up to the 6,834 point level, which would indicate the market's recent rebound had more strength left in it.
"If the FTSE falls over again around these levels, it would just perpetuate the drift lower that we've seen in the last two months," he said.
Among other sharp movers, Irish building supplies group CRH (L:CRH) fell 3.9 percent after Deutsche Bank cut its target price for the stock to 1,450 pence from 1,500 pence with a "hold" rating.
(Additional reporting by Sudip Kar-Gupta; Editing by Robin Pomeroy)