The FTSE 100 index closed down 0.1%, declining for the third consecutive session.
Entain plunged 11.9% to the bottom of the blue-chip index after MGM said it would not submit a revised proposal or make a firm offer for Entain, which had said the approach announced two weeks ago significantly undervalued its business.
Miners dragged even as Rio Tinto - the world's biggest iron ore producer - reported a 2.4% rise in fourth-quarter iron ore shipments, helped by industrial activity in China.
Rio's shares fell 1.0%, while Anglo American and Glencore dropped more than 1%.
"Today is an example of a period which we are in right now - which is very much a consolidatory phase," said Craig Erlam, an analyst at OANDA.
"In the coming days, we will learn a lot about how impactful the new U.S. administration will be, with the slimmest of majority in the Senate."
The FTSE 100 tumbled 14.3% in 2020, its worst performance since the 2008 financial crisis and underperforming its European peers by a wide margin, as pandemic-driven lockdowns battered the economy and led to mass layoffs.
Britain reported a record number of deaths from COVID-19 today with 1,610 people dying within 28 days of positive coronavirus test, exceeding the previous peak set last week.
The mid-cap index lost 0.1%, with real estate and consumer stocks being the biggest drag on the index.
In other company news, shopping centre operator Hammerson Plc fell 2.1% after receiving less than half of the rents due for the first quarter as stricter COVID-19 restrictions aggravated conditions in Britain's high streets and rest of Europe.
OXO cube maker Premier Foods fell 4.8% despite a 90% jump in the third-quarter online sales, while British fashion group Superdry lost 16.3% after reporting a big drop in sales in the Christmas quarter.
(Reporting by Shivani Kumaresan in Bengaluru; Editing by Subhranshu Sahu, Shailesh Kuber and Alexandra Hudson)
By Shivani Kumaresan