Britain's FTSE 100 index remained steady on Thursday, with an increase in commodity stocks due to speculations for M&A and higher raw material prices.

UK's main index recorded 0.01 percent decline at 1159 GMT, against 2.7 percent increase in the previous session.

Demand for commodity was high due to increase in oil prices to $4 a barrel following North America pipeline explosion.

BP and Royal Dutch Shell advanced 1.5 and 0.2 percent respectively as miners gained on sector consolidation talk.

Vedanta Resources' stock hiked by 6.2 percent amid speculation of traders renewed market talk of bid interest that the firm denied.

London listed Chilean copper miner Antofagasta's stock was up by 5.8 percent showing a great improvement after 6.1 percent fall in nine month core profit.

Investors were cautious about banks as banking stocks weakened due to write-downs on credit market losses.

UK based Barclays bank stocks ranged between 0.2 and 3.5 percent while Royal Bank of Scotland dropped by 4.2 percent on renewed market talk of possible write-downs.

Alliance & Leicester surprisingly shot up 12 percent after announcing a 4 billion pound financing facility with Credit Suisse that will see the firm pre-funding its maturing medium term fund into the third quarter of 2008.

The Nationwide building society indicated the sharpest fall in house prices causing great concerns about UK's economic strength.

UK's pound sterling dropped against the dollar indicating possibility of rate cut after the release of house price data.

Bank of England Governor Mervyn King also expressed concern about a slowing economic forecast but gave little hopes of the central bank cutting interest rates next week.