Leisure firm Whitbread was the day's worst-performing blue chip, down 4.4 percent after first half profit came in at the low end of forecasts and it said difficult trading conditions would continue.
Oil giant BP closed 1.2 percent down on disappointment that a sharp rise in third quarter profits was blunted by disruption from hurricanes Katrina and Rita.
M&S closed 3.6 percent higher at 415-3/4p, breaking above the 400p per share level at which entrepreneur Philip Green pitched his abortive bid last year. The shares earlier touched a 3-1/2 year high of 417-3/4p.
Traders said a reiterated "buy" recommendation from broker Cheuvreux supported the shares along with the unwinding of "sell" option positions taken ahead of M&S's well-received trading update in mid-October.
The FTSE 100 index closed down 25.5 points at 5,182.1, with prices dipping late in the day after Wall Street slipped in the wake of a key economic gauge showing a larger-than-expected drop in consumer confidence.
David McCraw, head of index tracking at Aberdeen Asset Management, said generally strong US corporate results were helping support share markets after the recent sell off, which hauled the FTSE from four-year highs.
"Certainly looking at some numbers coming out of Wall Street people are coming to the fact that the market there ... is probably as attractively valued as it has been for some time and the momentum in corporate profits doesn't seem to be showing that much sign of waning," he said.
One trader said the market was continuing to consolidate after sliding from above 5,500 on concerns that higher oil prices would stoke inflation and provoke interest rate hikes.
"Our feeling is that the bad news has been priced into this market, although there is still a residual issue over confidence and that might take a couple of weeks to return. It's going to take people more than a day or two to sort themselves out after what has really been a brutal selloff," said a trader.
Household products maker Reckitt Benckiser was another big faller, down 3.7 percent as investors ignored third-quarter profits at the top end of forecasts to concentrate on news that sales growth was at the bottom of a target range.
The company, which makes Mr Sheen polish and Lysol disinfectant, also reminded investors of rising energy prices.
Blue-chip telecoms firms Cable & Wireless and O2 gained ground on take-over talk. C&W put on 3.3 percent as traders speculated a US software giant might be interested, while O2 gained 1.1 percent.
"There will be a takeover (of O2), the only question is timing," one dealer said. "Cable has been smashed and people are saying at these levels it looks a fair bet."
Budget airline easyJet was the top-gaining mid-cap stock, closing 6.3 percent higher on speculation Icelandic investment group FL, which controls Icelandair, would push its stake up to 15 percent from 13 percent. The speculation flared after FL on Monday agreed to acquire Nordic low-cost airline Sterling.
Telecoms equipment maker and mid-cap Marconi Corp rose 5.2 percent after it said it had agreed to sell most of its assets and its iconic name to Sweden's Ericsson for around 1.2 billion pounds. Marconi will be renamed Telent Plc after the deal and will maintain a small services business in the UK.
Pharmaceutical firms also fell, with GlaxoSmithKline shedding 1.9 percent after a rating downgrade from ABN Amro.