The blue chip FTSE 100 index ended the session 0.4 percent lower at 7,725.43 points, underperforming the broader European market.

Within small market capitalisations, Interserve saw its shares tumble around 15 percent at the open then gradually recoup most of its losses, closing 0.4 percent lower.

"Comparisons with Carillion are all too easy to make of course," Neil Wilson, a senior market analyst at ETX capital said, adding that "in the case of Interserve the arithmetic doesn’t look anything like as bad as Carillion".

Informa's 3.8 billion pound offer for events organiser UBM also triggered dramatic moves, with the latter surging 12 percent and the bidder sinking 5.7 percent at the same time.

Shares in luxury brand Burberry were the biggest fallers on the FTSE, losing more than 9 percent after reporting a 2 percent drop in retail revenue for the Christmas quarter.

"Following better than expected sales for the December quarter from Richemont and Hugo Boss, Burberry's retail performance in Q3 may be seen as a bit disappointing," said RBC Europe analyst Rogerio Fujimori, who has an "underperform" rating on the stock.

Pearson also sustained heavy losses, down 4.6 percent after saying it planned to cut staff and sell assets in a bid to eke out underlying growth in 2018, while its North American business continued to weigh on performance.

Provident Financial posted another session of losses after Tuesday's 13 percent fall, down a further 13 percent on the day.

Broker Liberum cut its price target on the stock and said the risks were still too great to consider owning the stock.

On a more positive note, British engineering group GKN added 1.3 percent after turnaround specialist Melrose raised its takeover offer to 7.4 billion pounds after meeting the company's shareholders.

The bidder gained 0.3 percent.

Rolls-Royce was the top FTSE gainer, up 5.4 percent after saying that it was considering the sale of its loss-making commercial marine business.

(Graphic for FTSE 100 vs 250, click http://reut.rs/2DGJGhd)

(Reporting by Julien Ponthus and Kit Rees; Editing by Gareth Jones)

By Julien Ponthus and Kit Rees