After yet another rollercoaster session, the top share index ended a touch lower on Wednesday, as upbeat U.S. economic data proved a welcome distraction for investors gripped by concern over the UK economy and Europe's debt crisis.
The benchmark <.FTSE> closed down 8.42 points, or 0.2 percent, at 5,509.02, after a session in which it swung more than 110 points -- hitting a low of 5,450.24 and reaching a high of 5,562.91.
The index, which sold off heavily after a sharp rise in unemployment and a cut in growth forecasts by the Bank of England, regained its poise on U.S. industrial output data supporting the case the world's biggest economy was in better shape than feared.
While financials, a barometer of investors' view of the global economic outlook, remained under pressure, they managed to pare back some of their losses by the market close.
Fund management group Schroders
Trading has been volatile, with the market swinging on developments relating to the euro zone debt crisis.
Investors have been obsessively monitoring Italian 10-year bond yields, currently still above the 7 percent levels widely considered unsustainable.
Sentiment on City trading floors remains muted as the political fiasco in the euro zone leads to unprecedented levels of volatility on a virtually minute by minute basis, Atif Latif, director of trading at Guardian Stockbrokers.
Traders are complaining of low volume in order flow as the continued uncertainty leads to directionless markets, the death knell of any trading floor.
Ed Woolfitt, head of trading at Galvan, said: We are looking at stocks that are resilient, the ones that don't collapse at any mention of Europe. There are some out there.
We're buyers of Weir Group
Economic data out of the UK added to the gloom and uncertainty hanging over the markets and showed how much Europe's debt problems are weighing on broader economic growth.
The UK's jobless rate hit a 15-year high, as the number of young people out of work soared to a record of more than 1 million, with the government blaming the euro zone's debt crisis for the figures.
The Bank of England sharply revised down its near-term growth forecasts, and now sees a strong chance that annual growth rates will be below 1 percent throughout 2012.
In its quarterly Inflation Report, the BoE indicated it might have to add to its 275 billion pound asset purchase programme.
Analysts further cut their 2011 and 2012 earnings forecasts for STOXX Europe 600 .STOXX companies, according to Thomson Reuters I/B/E/S, as the euro zone sovereign debt crisis threatens to hamper economic growth.
Ex-dividend factors also took a hefty 15.28 points off the FTSE 100, mostly accounted for by market heavyweight Vodafone
On the upside, Intertek
(Additional reporting by Francesco Canepa, David Brett, Dominic Lau)