Britain's top shares steadied on Thursday as stronger miners on the back of a rise in metals prices offset weaker energy shares, brought down by Royal Dutch Shell
Charts, however, signalled a rebound in equities in the near term after hitting oversold levels and recovering after touching some important support levels.
Miners gained as copper prices rose further above technical support at $8,000 a tonne as worries over the global economic outlook eased. Rio Tinto
But energy shares were under pressure. Royal Dutch Shell fell 5.1 percent, the top loser on the FTSE 100 index <.FTSE>, after an oil sheen spotted near one of the firm's platforms in the central Gulf of Mexico caused the company to send a spill response vessel and seek aircraft overflights.
The incident, which raised memories of BP's
At 1156 GMT, the FTSE 100 index was flat at 5,630.10 points, having rallied 0.7 percent on Wednesday following a decline of 2.3 percent in the previous session on global growth concerns and as a rise in Italian and Spanish yields raised new worries about the euro zone debt crisis.
Charts showed positive signals in the near term, especially after the FTSE 100 index bounced back in the previous session from a support level of 5,570, which provided a floor for the market in January.
The index is set for a rebound. Its 9-day RSI (relative strength index) fell into the oversold zone yesterday and coincided with the support level, said Julian McCormack, technical analyst at Brewin Dolphin.
The main reason why the market is not continuing its gains from yesterday is really the oil and gas sector. But it's not faring too badly, considering the size of the oil and gas sector within the FTSE 100. The bias is more on the upside.
Among some individual blue chip gainers, autos and aerospace parts firm GKN
Its shares were also supported by a 47 percent jump in British aerospace parts supplier Umeco Plc
But some analysts remained cautious and said that the debt problems in Europe and concerns about the pace of global economic recovery could scare investors.
The fears surrounding equity markets still remain and it's natural to have a second thought about whether Tuesday's fall represents the appropriate risk reward to get in and buy at these levels, said Angus Campbell, head of sales at Capital Spreads.
Yesterday's rally has a little bit of a dead cat bounce feel about it and equity markets have looked a little overextended ever since they failed to take out the highs of the year back in March.
Citigroup downgraded its overall stance on UK equities to neutral from overweight, putting it on the same rating as the rest of Europe.
Weak Eurozone economies and ongoing austerity measures should remain significant drags on the UK economy over the next 12 months, Citigroup said in a global strategy review.
On the domestic macro economic front, Britain's global trade deficit widened by more than expected in February, to -8.772 billion pounds, versus a -7.7 billion pounds forecast gap.
(Additional reporting by Philip Baillie; Editing by Alessandra Rizzo)