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Leading London shares were lower midafternoon with Wall Street opening lower and Wolseley down in the blue chips after an update failed to inspire.

At 15.17 pm, the FTSE 100 index was down 18.4 points at 6,654.8, having been as high as 6,691.8 and as low as 6,647.1. The FTSE 250 index was 16 points lower at 11,817.4. The remaining indices were mixed.

Volume was average, with 2.1 bln shares changing hands in 391,330 deals.

'Its been a quiet day in the markets with no major stories driving it. The Bank of England put interest rates up as expected but with a more hawkish tone which initially made the market more nervous. The market is now anticipating one more rate rise this year. But, there is nothing fundamentally going on today,' said Roger Cursley, UK strategist at Investec Securities.

Wall Street fell in early trading Thursday after dealmaking news lifted some sectors, but investors remained jittery about rebounding bond yields and data on the US service sector.

The Institute for Supply Management (ISM) non-manufacturing business index rose to 60.7 in June.

Economists were expecting a pullback to 58.1 after the surge in May, given weak mortgage demand and retail sales.

A reading above 50 indicates growth in the sector, while a reading below 50 means contraction.

In the first minutes of trading, the Dow Jones industrial average fell 41.38, or 0.30 percent, to 13,535.92.

Broader stock indicators also declined. The Standard & Poor's 500 index was off 1.71, or 0.11 percent, at 1,523.16, and the Nasdaq composite index fell 1.30, or 0.05 percent, to 2,643.65.

In other economic data, the Labor Department's weekly report on jobless claims showed a modest rise. On Friday, Wall Street will be closely reading the department's report on June payrolls and unemployment.

On the blue chip downside, building materials giant Wolseley was the biggest casualty in the FTSE 100, falling 26 pence to 1,189 after an update failed to inspire the market. The company said it had made five bolt-on acquisitions since the start of the year. The firm has made a total of 41 bolt-on acquisitions since Aug 1, 2006, for a total of 374 mln stg.

Vodafone was another faller, on reports it has lost out on a deal to offer Apple's iPhone. The shares were 2.8 pence lower at 163.2, after the FT reported that Telefonica's O2 mobile phone unit is set to reach a deal to become exclusive network partner for Apple Inc's iPhone in the UK. The FT said the European iPhone will operate on slower 2.5 generation mobile networks, not the 3G infrastructure of companies such as Vodafone. Investors continued to switch off ITV, 1.2 pence lower at 113.3. The fall was a continuation from yesterday, when the group reported lower market share. Today, Morgan Stanley cut its earnings estimates for the company.

Elsewhere, ITV was 1.6 pence lower at 112.9 with Morgan Stanley reiterating its 'equal-weight' stance and price target of 117 pence, but cutting its earnings per share estimates following yesterday's trading update.

Morgan Stanley pointed out that it is lowering ITV's earning per share (EPS) forecasts in 2007 by 9 pct and 2008 by 4.5 pct following a mixed pre-interim trading statement.

Turning to the blue-chip gainers, Capita Group topped the FTSE 100 risers, rising 15-1/2 pence to 747, after Deutsche Bank upped its target to 800 pence from 700 and reiterated its 'buy' rating after highlighting the firm's compelling combination of strong, defensive growth.

Deutsche Bank said it believes that Capita's growth and margin outlook remains compelling.

It believes that strong growth will deliver further share price upside, and this growth has the added attraction of being highly defensive in nature, making Capita one of the most compelling stories in the Business Services sector.

And Lloyds TSB took 10 pence at 563, boosted by a Citigroup upgrade to 'buy' from 'hold' with a raised target of 650 pence from 600 this morning.

Citigroup highlighted its strategy of modest asset growth, tight cost control, and an increased focus on liability-driven business which it said would deliver double digit earnings growth out to 2010.

It said Lloyds TSB has the benefit of being neither caught up in time consuming M&A activity nor suffering the fall out from pursuing an aggressive growth strategy in a period of rising interest rates.

Miners also lent support after gold prices inched higher, supported by strength in the price of crude oil and ongoing weakness in the dollar, with BHP Billiton up 18 pence at 1,455, and Xstrata 54 pence firmer at 3,163, and Rio Tinto rising 56 pence to 4,000.

Meanwhile, shares in Cadbury Schweppes moved up 3 pence to 673, following news after yesterday's close that Coca-Cola Co is exploring whether to buy its Snapple iced tea brand or build its own tea brand, according to a spokesman.

Elsewhere, Morrison was up 5-1/4 at 306-3/4 ongoing speculation about to sell portfolio of properties.

Turning to the midcap risers Northern Foods was the top mid cap riser up 6-1/4 at 117-1/4.

A london base trader said it was a technical rebound amid speculation of sector consolidation.

Insurer Admiral gained 41-1/2 pence to 982 after UBS upgraded its rating to 'buy' from 'neutral'. The broker noted that Admiral shares had fallen 25 pct since the beginning of April.

Trading statements were much in focus this morning with Michael Page International up 23-1/2 pence to 583, after the recruitment firm posted a strong second-quarter trading update, leading Altium Securities to upgrade the stock to 'add' from 'outperform'.

Panmure Gordon also upped its rating on Michael Page, to 'buy' from 'hold', and increased its target price to 630 pence from 530.

And Game Group picked up 8 pence at 190, after the computer and video games retailer said it expects to report continuing robust trading when it updates shareholders at its annual meeting.

On the downside, Cookson Group lost 30-1/2 pence at 716-1/2 amid some profit-taking following a trading update and despite Bridgewell Securities reiterating its 'overweight' stance.

And Interserve fell 13-1/2 pence to 504, after saying trade continues to be strong generally with buoyant markets, and it is confident about its outlook for the full year, with Altium keeping its rating at 'buy' and raising its target to 575 pence.

Altium said that, based on the sustained trading momentum across the key operating units, it would be surprised if consensus numbers were not moving forward through the course of 2007.

Shares in Ladbrokes fell 3-1/4 pence to 438-3/4 after cautious comments by the UK bookmaker in relation to its retail business overshadowed 'significantly increased' levels of high rollers' telephone betting activity in recent weeks.

Ladbrokes also said it continued to trade in line with management's expectations despite challenging trading conditions for UK retail over-the-counter business. Meanwhile, telephone betting operating profit for the six months to the end of June is expected to be around 45 mln stg higher than during the same period of last year, equating to first-half EBIT of 61.6 mln stg. ABN repeated its 'hold' recommendation and 425 pence price target on the stock. It believes an LBO bidder could generate a 15-20 pct internal rate of return at a valuation of 460-480 pence per share.

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