There was relief after Monday's tech stocks sell-off, which hit UK tech firms Micro Focus (>> Micro Focus International plc) and Sophos (>> Sophos Ltd), but trading remained muted with the FTSE 100 <.FTSE> ending down 0.15 percent as investors continued to sift through the fall-out from Britain's election.

"There's a tendency to turn to one factor and attribute it to that, but people always just get nervous when valuations get very high, as they did with these companies," said Laura Foll, UK Equity fund manager at Henderson.

The blue-chip index reversed earlier small gains as big international firms such as British American Tobacco (>> British American Tobacco) and GlaxoSmithKline (>> GlaxoSmithKline) progressively lost ground, as high inflation numbers helped the sterling recover.

Capita (>> Capita) jumped 15 percent to its highest level in eight months after its trading update suggested green shoots of recovery were appearing.

The outsourcing firm scored its best day in 17 years as analysts praised progress in its efforts to restructure the business which has suffered a string of profit warnings and demotion from the blue-chip index.

"Capita's pre-close interim management statement points to progress on many fronts as Capita works through a "transitional" year," said UBS analysts.

Capita helped mid-caps <.FTMC> gain 0.9 percent, outperforming the blue chips.

The morning after Prime Minister Theresa May's grilling by Conservative MPs following a disastrous election, investors looked for signs the government stance on Brexit was softening.

"There seems to be a shift towards staying in the single market and the customs union," said Foll. "That would be pretty significant for our portfolio if it did prove to be true."

London Stock Exchange (>> London Stock Exchange) rose 5.4 percent after the firm said it expected growth, shrugging off the disappointment of a scuppered merger with Deutsche Boerse.

Merlin (>> Merlin Entertainments) fell 2.7 percent after the entertainment company behind Madame Tussaud's waxworks museum and Legoland said militant attacks in London and Manchester had dented demand.

The company's shares have been the most sensitive to recent attacks.

Ashtead (>> Ashtead Group) ended down 2.5 percent, reversing earlier gains that followed results showing a 7 percent rise in full-year profit, boosted by strong growth in its core North American unit as well as its UK business.

Meanwhile, among mid-caps, oil services firm Petrofac (>> Petrofac) gained 3.7 percent, boosted by a $35 million contract with the Kuwait Oil Company.

Property company Kennedy Wilson Europe (>> Kennedy Wilson Europe Real Estate PLC) jumped 7.3 percent after its U.S. parent company (>> Kennedy-Wilson Holdings Inc) sweetened a deal to buy it back.

(Additional reporting by Danilo Masoni; Editing by Ed Osmond and David Evans)

By Helen Reid