Britain's top share index faltered around midday on Monday as equities handed back more early second-half gains, subdued by slowing global growth and nervous about the latest quarterly earnings season.

By 13:05 SA time, London's blue chip index was down 20.40 points, or 0.4 percent at 5,642.23, now 1.6 percent lower than the second-half intraday high hit on Thursday as the early third-quarter rally shows signs of flagging.

A late surge towards the end of the second quarter left the index almost unchanged in the first half of 2012.

The recent FTSE 100 rally failed around 5,700, the technically significant 61.8 retracement of the fall which began in March, when euro sovereign debt worries resurfaced, and bottomed out at the beginning of June, as expectations of central bank intervention grew.

Europe and China cut interest rates on Thursday, while the Bank of England extended its stimulus programme in attempts to fuel economic growth, but Friday's weak jobs data in the US highlighted the difficulty facing policymakers.

“There's a general belief that central banks are at the end of their tether as to what they can do ... Caution is the word and no one wants to get stuck in now with things looking so bearish,” Chris Beauchamp, market strategist at IG Group, said.

Approaching midday on Monday, the FTSE 100 had traded just 18 percent of its 90-day average.

The focus now switches to how far companies have been able withstand the economic slowdown.

A raft of brokers issued comment on Monday warning of the risk of earnings disappointment with US aluminium maker Alcoa set to kick things off after the market closes later on.

Wall Street was set to open weaker later on Monday.

JPMorgan analysts said the second-quarter earnings season looks “challenging” with the hurdle rate higher than for the first quarter in both Europe and the United States even though business activity has weakened.

The bank said sectors most at risk include capital goods, chemicals and discretionary.

The pull back in discretionary spend hit recruiter Michael Page, which was down 4.2 percent after the firm reported a fall in second-quarter profit and predicted a tough third quarter.

UBS, meanwhile, said sectors such as tobacco, beverages, retail and consumer durables could be at risk because they trade at high premiums relative to long-run average P/E multiples and earnings momentum has started to fall.

Luxury goods firm Burberry, which is liked for its exposure to Asia and trades on 12-month forward PE of 15 times, compared with 9.8 times on the FTSE 100, was down 3 percent.

UK Retailers SuperGroup and Marks and Spencers are among the most shorted UK-listed stocks ahead of earnings, according to data from Markit Securities Finance.

Retailer Kingfisher edged lower as Oriel Securities warned negative earnings momentum will keep Europe's largest home improvement group's shares under pressure.

UBS, however, said politics and macroeconomics remain the key drivers for European equities and that was reflected in a 10 percent fall in Centamin Egypt.

The Egypt-focused gold miner's shares plunged on a combination of both reported breaches in the company's concession agreement and political events over the weekend in Egypt, according to analysts.

Elsewhere, blue chip miner Xstrata shed 2.3 percent, giving up some its recent gains after the Sunday Times said the firm would tell shareholders this week that the vote on its planned merger with Glencore has been put back to September.

Glencore fell 1.3 percent as the percentage of shares outstanding on loan creeps towards the 7 percent level, an all-time high since its flotation, according to Markit. - Reuters