The FTSE 100 index gave up early gains to trade 5.67 points, or 0.1 percent, lower at 6,954.82 by 1351 GMT.

The index hit a high of 7,015.49 points early in the day, nearing its record peak of 7,122.74 points reached in late April. The FTSE 100 is up by around 7 percent this year.

Jordanian pharmaceuticals company Hikma was the biggest loser on the index, sliding 1.9 percent after its founder, who was also a major shareholder, died on Friday.

Lloyds also fell after the bank was downgraded to "sell" from "hold" by Investec.

Still, out of 26 analysts with a rating on Lloyds, only three have a "sell" rating, according to Thomson Reuters data. Shares in the bank are up over 13 percent this month.

"They've had a really strong rally this year, and I've been expecting them to pause," Zeg Choudhry, managing director of LONTRAD, said. "However, there are not many with a `sell' rating on the stock ... the general trend for the stock is higher."

Among risers, BHP Billiton reversed early losses and traded up 2.3 percent after a weak debut by its spinoff, South32, in Sydney. News that the new firm would not be included in FTSE indices led some fund managers to take money out of South32 and put it into BHP, traders said.

Gold and silver miner Fresnillo advanced by 5.1 percent to 790 pence, the top riser, after it gave a reassuring outlook at its annual general meeting, saying that its 2018 silver production target remained in place.

"Precious metals were out of favour in 2014 with silver prices falling around 20 percent but look to be stabilising," Brenda Kelly, head analyst at London Capital Group, said in a note.

"Shares in Fresnillo are now trading at six-week highs and could pursue a move towards 800p should metal prices continue to rebound."

Material-related companies added 9 points to the index, with the FTSE 350 Mining Index rising 1.1 percent.

Engineering company Weir also gained 1.7 percent after U.S. bank Citigroup upgraded its rating on the stock to "buy" from "neutral".

Among mid-cap stocks, engineering software group Aveva jumped 9.3 percent on bid speculation. Satellite company Inmarsat fell 3.2 percent after a delay in the launch of its third Global Xpress satellite.

(Editing by Larry King and Susan Fenton)

By Alistair Smout and Sudip Kar-Gupta