Santa failed to make an appearance on Wednesday as London stocks ended the shortened Christmas Eve session in the red.
The FTSE 100 closed down 0.2% at 9,870.68.
Chris Beauchamp, chief market analyst at IG, said: "For a while last week it looked like the FTSE 100 might well make 10,000 before Christmas, but gains have stalled in recent days. The index has still managed to beat the S&P 500 so far this year, marking a welcome change from previous years, though the latter index managed a fresh record high yesterday.
"Given the way AI bubble fears and worries about expensive US stocks are unlikely to go away next year, we can expect the rotation trade to continue benefiting the index in 2026.
"Attention now turns to whether we do get the 'Santa Rally', which is strictly speaking an event that comes between Christmas and New Year. The recent slump in the VIX augurs well for a bounce, given that previous instances of sharp falls in volatility have delivered a commendable 0.8% bounce in the S&P 500 over the next week."
Corporate news was unsurprisingly scarce, but BP confirmed the sale of a majority stake in its Castrol lubricants division to US infrastructure group Stonepeak in a deal that values the business at about $10bn including debt. The shares ended the session a touch lower.
The energy giant is looking to make $20bn in divestments by 2027 in response to pressure from activist hedge fund Elliott Management, which wants the company to cut costs and lower debt. It started the sale process for Castrol in February.
Russ Mould, investment director at AJ Bell, said: "Shareholders in BP got an early Christmas present with news of the sale of the company's lubricants business Castrol.
"Given a healthy dose of speculation that the price tag would be on the low side, the market seems fairly happy with the outcome. The significant proceeds from the transaction will allow BP to make a decent dent in its onerous borrowings pile. It also means it is well on the way to achieving its goal of $20 billion worth of divestments by 2027.
"The next key test for BP, which continues to have its feet held to the fire by activist investor Elliott, is a strategic review expected in February. Recently departed boss Murray Auchincloss arguably never recovered from his own strategic reset in February this year which fell short of most investors' expectations, so BP cannot afford a similar disappointment this time around.
"Unlike Auchincloss, freshly appointed chair Albert Manifold and incoming CEO Meg O'Neill are outsiders. This may make it easier to deliver radical change at BP after its failed effort to transform into a green energy powerhouse."
Elsewhere, Petrofac said it has agreed to sell its Asset Solutions business to Texas-based CB&I in a deal that will save thousands of jobs.
The ultimate net proceeds from the sale will depend on the quantum of various deductions which will only be confirmed closer to completion. However, the company's administrators expect a range of between $45m and $55m, Petrofac said.
Market Movers
FTSE 100 (UKX) 9,870.68 -0.19%
FTSE 250 (MCX) 22,314.50 -0.16%
FTSE 100 - Risers
Schroders (SDR) 406.20p 1.50%
Pershing Square Holdings Ltd NPV (PSH) 4,902.00p 1.07%
Persimmon (PSN) 1,336.00p 1.02%
Smurfit Westrock (DI) (SWR) 2,837.00p 0.78%
Melrose Industries (MRO) 585.20p 0.76%
Entain (ENT) 750.60p 0.72%
JD Sports Fashion (JD.) 83.48p 0.70%
F&C Investment Trust (FCIT) 1,246.00p 0.65%
Anglo American (AAL) 3,012.00p 0.63%
easyJet (EZJ) 509.60p 0.55%
FTSE 100 - Fallers
Games Workshop Group (GAW) 18,880.00p -1.46%
Fresnillo (FRES) 3,200.00p -1.42%
Rolls-Royce Holdings (RR.) 1,149.50p -0.91%
Admiral Group (ADM) 3,154.00p -0.82%
Burberry Group (BRBY) 1,252.50p -0.71%
The Sage Group (SGE) 1,079.50p -0.69%
Auto Trader Group (AUTO) 586.60p -0.68%
Airtel Africa (AAF) 335.80p -0.59%
Compass Group (CPG) 2,370.00p -0.59%
DCC (CDI) (DCC) 4,710.00p -0.55%
FTSE 250 - Risers
Diversified Energy Company (DI) (DEC) 1,080.00p 3.35%
Ashmore Group (ASHM) 174.20p 2.11%
Applied Nutrition (APN) 255.00p 1.80%
Morgan Advanced Materials (MGAM) 216.50p 1.41%
Frasers Group (FRAS) 677.00p 1.20%
Vietnam Enterprise Investments (DI) (VEIL) 781.00p 1.03%
Pan African Resources (PAF) 122.40p 0.99%
Princes Group (PRN) 473.00p 0.96%
Workspace Group (WKP) 392.00p 0.90%
Playtech (PTEC) 286.00p 0.88%
FTSE 250 - Fallers
Ceres Power Holdings (CWR) 225.00p -3.18%
IP Group (IPO) 57.70p -2.04%
Cranswick (CWK) 4,930.00p -1.60%
Patria Private Equity Trust (PPET) 601.00p -1.48%
Moonpig Group (MOON) 203.00p -1.46%
Harbour Energy (HBR) 195.90p -1.41%
Foresight Environmental Infrastructure Limited (FGEN) 65.30p -1.36%
Ithaca Energy (ITH) 161.20p -1.35%
WH Smith (SMWH) 623.00p -1.35%
Avon Technologies (AVON) 1,800.00p -1.32%