But talk a big banking deal was near helped steady sentiment and the FT-SE 100 index ended with a 20.5-point gain to 3,759.7.
Once again Gas dominated the proceedings, with Seaq printing turnover at 84.3 million shares. The price dipped to 191.5p, closing 6p off at 195p.
National Grid lost 6p to 186.5p, lowest since December's flotation. The shares represent a sorry spectacle for stockbroker James Capel, which in a controversial and still to be fully explained deal, took on its books 12.5 per cent of Grid from Hanson at 192p. It has since managed to unload some of the shares but the popular guess is that it is still uncomfortably sitting on around 11.3 per cent of the company.
The deal has, at least to some extent, been hedged by Capel through a link with Olayan, a Saudi Arabian company.
BT plunged to new 12-month lows, off 7p at 326.5p, and electricity and water shares were other casualties of feared regulatory zeal.
The English generators, however, were in a cosy world of their own. PowerGen, at one time down 9p, ended with an 8p gain at 547p.
It has wasted no time selling its 80.3 million Midlands Electricity shares for pounds 353.4m - a pounds 69m profit. Buyers are the US bidders that moved in after PG's offer was blocked by Whitehall.
The generator, however, added spice to its share sale by bringing forward its yearly results to today. On the basis that good figures are much easier to add up than poor ones and are often bought forward the market immediately sensed that PG will have an exceedingly happy tale to tell, with the strong possibility of share buy-backs and special dividends.
National Power glowed on the back of its rival. At one time down 10p, it closed at 527p, off just 2p.
Banks were in fine form. The decision by Standard Life to review its 32.2 per cent shareholding in Bank of Scotland got minds whirling about other banking possibilities.
There has for some time been talk of a big deal in the sector. BofS dutifully gave up a little of Monday's gain but Royal Bank of Scotland, planning a round of US presentations, jumped 18p to 538p and Standard Chartered 16p to 624p.
Barclays, on continuing stories that it intends to hive off its investment arm, improved 14p to 762.5p.
Stores were helped along by an encouraging review which prompted stockbroker Mees Pierson to lift its target price for Dixons to 600p. The shares rose 12p to 490p.
Supermarkets continued their advance with Asda 2.25p higher at a 12-month high of 117.75p and J Sainsbury 9p firmer at 387p.
But Wickes, the building materials retailer, had a tough time, falling 7p to 119p. Merrill Lynch seems to have done the damage, selling 12.5 million shares taken on at 114p on Monday at around 117p/118p.
Wolseley was the best-performing blue chip, up 18.5p to 476.5p, with Kleinwort Benson positive.
Meyer International, up 5p at 453p, continued to attract takeover talk and a newcomer to the bid frame, Appleyard, the car group, edged ahead 1p to 106p.
Innovations, a direct sale business, firmed 13p to 195p on suggestions that a proposed management buy-out will be scuppered by an outside bid.
Drugs were weak, with British Biotech off 110p at 2,845p, and Celltech lost 23p to 635p. Cantab Pharmaceuticals, raising pounds 25m through a share placing, was firm at 673p.
British Steel was the subject of conflicting advice. SBC Warburg said sell, cutting this year's forecast from pounds 725m to pounds 645m. Kleinwort lifted its forecast from pounds 650m to pounds 700m and recommended holding the shares, off 4p to 179.5p.
Growing hopes of a link with American Airlines lifted British Airways 85p to 543.5p. Figures are due next week.
Profit warnings crippled Wace, a printer, 44p to 223p and publisher Hodder Headline 36p to 224p.
Southend Property gained 3p to 45p on its Australian involvement but Tepnel Life Sciences lost 7p to 74p following an agency cross at 74p.
Irish resource shares were enlivened by Dublin talk of takeover action. Ivernia West added 2p to 91p and Navan Resources 8p to 224p.
Tullow Oil was firm at 94p on bid hopes.
Thomas Potts, a printer, is the latest to take AIM, closing at 10p against a 5p placing.