The FTSE 100 index is down 4.5 points, or 0.08%, to 5,535.3, weighed down by building materials group Hanson after it forecast a weak start to 2006.
Hanson is currently the biggest faller, with a loss of 9p, or 1.44%, to 614p, after it forecast a rise in pre-tax profit this year but said weak demand in the UK and high energy costs were a risk next year.
Meanwhile ICI has dropped 4p, or 1.21%, to 327p, while defence group BAE Systems has also slipped 4.25p, or 1.21%, to 346p, after Merrill Lynch cut its rating on the stock to 'neutral' on valuation grounds.
Smaller energy stocks Tullow Oil and Dana Petroleum are also struggling. Tullow Oil has dropped 2.24% to 262p, while Dana Petroleum has fallen 10% to 918p, as the oil explorers said they were abandoning a well in Mauritania.
In Japan the Nikkei 225 Stock Average rose 249.78, or 1.6%, to 15,641.26, at its close a short time ago, as property shares climbed to the highest in more than 15 years.
Mitsubishi Estate, Japan's largest property developer by market value and owner of buildings in the central Tokyo business district, surged 180 yen, or 9%, to 2,190, while Mitsui Fudosan, the biggest developer by sales, jumped 160 yen, or 7.4%, to 2,310.
Sumitomo Realty & Development, the third biggest, also rose 165 yen, or 7.3%, to 2,440, as property shares jumped on speculation investors are increasing their bets in the nation's property market as an end to deflation boosts land and asset prices.
In the banking sector Mitsubishi UFJ, Japan's biggest lender by assets, rose 40,000 yen, or 2.4%, to 1.68 million, while Sumitomo Mitsui Financial Group, the nation's third-biggest lender, advanced 30,000 yen, or 2.4%, to 1.27 million.
Meanwhile, semiconductor-related stocks also climbed, with Advantest, the world's biggest maker of memory-chip testing equipment, jumping 390 yen, or 3.7%, to 10,980, while Tokyo Electron, the world's second-biggest supplier of chipmaking equipment, also gained 100 yen, or 1.4%, to 7,230.
In the US the Dow Jones Industrial Average index fell 39.06 points, or 0.36%, to 10,836.53, on weakness in semiconductor shares after a brokerage cut ratings on six major stocks in the sector, including Texas Instruments.
Texas Instruments declined 3.1% to $32.03, after a brokerage cut its rating on six semiconductor stocks, saying the market has already taken into account most of the industry's strengths and it was "time to take profits" on the sector.
Of the other six stocks, Advanced Micro fell 0.2% to $28.12, while Broadcom slid 4.1% to $47.01. Meanwhile RF Micro Devices fell 4.2% and Intersil dropped 3.1% to $24.29.
Elsewhere, heavy-equipment maker Caterpillar was the biggest drag on the Dow with a loss of 4.7% to $56.83.
One of the biggest gainers was drug maker Pfizer, which rose 7.7% to $24.32, after a federal judge upheld the validity of the drug maker's Lipitor patents, blocking a generic version of the medicine that had threatened the company's largest source of revenue.
Pfizer's legal victory boosted other drugmaker shares, with Merck rising 7.5% to $32.25, while Schering-Plough, added 4.9% to $20.74.IFAonline
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What made financial headlines over the weekend?