Britain's FTSE 100 was flat by midday on Wednesday, suggesting that investors are waiting to see if the billions of euros banks have taken from the European Central Bank will flow into the real economy to help boost growth.
Banks took 530 billion euros at the European Central Bank's second offering of cheap three-year funds on Wednesday, slightly above forecasts.
What is important now is that European banks use these funds to lend to individuals and businesses to stimulate economic growth, rather than just buying up government bonds, Richard Driver, market analyst at Caxton, said.
In a sign banks were beginning to pass cash on to consumers, mortgage lending and mortgage approvals for house purchases in Britain posted a surprisingly strong rise in January, but credit-card and other unsecured lending remains largely flat, highlighting many Britons remain cautious.
London's blue chip FTSE-100 index was down 7.52 points, or 0.1 percent at 5,920.39 by 1142 GMT.
Analysts don't expect this LTRO (ECB cash) to have the same positive impact on risk assets as December's. So we may see markets pull back after an initial rally, said David Morrison senior market strategist at GFT Global.
Banks were firmer. Standard Chartered was up 2.0 percent after the Asian-focused lender notched up a ninth consecutive year of record earnings in 2011 on the back of strong economic growth in Asia.
Those gains were offset by falls in miners. The prospect of more credit flowing to businesses boosted the demand outlook, ahead of China's key purchasing managers' index for February due on Thursday. But that was offset by mining heavyweights BHP Billiton and Rio Tinto going ex-dividend.
Stocks going ex-dividend knocked 7.65 points off the FTSE 100 index, with drinks firm Diageo losing its payout attractions.
Trevor Greetham, Director of Asset Allocation at Fidelity Worldwide Investment, said the markets desire for risk assets, which has driven the FTSE up 6.3 percent in 2012, could come under pressure if central banks stop supporting the financial system.
A premature curtailment of central bank liquidity, due to a rise in inflationary pressures or simply due to complacency, could lead to another downswing in global growth as we saw in 2011.
Fidelity moved overweight equities and commodities in its multi asset funds in February for the first time since July 2011.
Earnings news drew a mixed reception from investors. ITV rose 7.2 percent to an 11-month high, after the free-to-air broadcaster's full-year earnings comfortably beat expectations, helped by growth in its own productions.
Numis upgraded ITV to buy from add after very strong results from the home of hit costume drama Downton Abbey.
British Airways owner IAG's shares climbed 1.2 percent after it reported a rise in full-year profit, helped by higher than expected cost savings from the BA-Iberia merger, but warned cost pressures would hit profit in 2012.
Of the 64 percent of companies in Europe to report earnings so far this quarter, 51 percent have beaten or met expectations, according to Thomson Reuters Starmine data.
British engineer Weir Group shed 1.8 percent after the company's full-year results beat forecasts with a 34 percent surge in profit. Broker Panmure Gordon pointed out that a weaker margin picture could mean there will be little change to 2012 estimates.
Weir's shares have gained 60 percent since November. Weir has the second highest price-to-earnings valuation (PE) among its peers, on 14 times, with only Rotork on a higher PE of 18 times, according to Thomson Reuters Starmine data.
The top faller on the index was Essar Energy, down 5.3 percent, as Credit Suisse cut its rating to neutral from outperform on short-term financing concerns.
Essar still offers a strong growth and long-term cash generation profile, but we need more clarity on near-term financing and progress on negotiations with the state government and lenders, Credit Suisse said in note.
Wall Street futures pointed to a mixed open on Wednesday, after the Dow closed above 13,000 for the first time since May 2008 in the previous session.
Investors will also focus on some key U.S. pointers, with preliminary U.S. fourth-quarter GDP numbers due at 1330 GMT, February's Chicago PMI scheduled for 1445 GMT, and the Fed's latest Biege Book published after the London close at 1900 GMT.