Britain's FTSE 100 rose early on Friday, with the index set to record its heaviest weekly loss in 2012, as concerns over global growth and the waning effect of the liquidity boost from central banks' keeping investors at bay.
London's blue chip index <.FTSE> crept up 29.63 points, or 0.5 percent to 5,875.28, by 0901 GMT, having shed 0.8 percent in the previous session as China emitted further signs of growth pains and poor manufacturing data out of Europe prompted falls in cyclical shares such as miners.
Investors are starting to wonder whether the two LTRO's issued by the ECB are starting to wear off already, said Simon Furlong, trader at Spreadex.
Whatever politicians decide to do to stem growth fears in Europe, they should bear in mind that there is only so much stimulus you can give an economy before the effects become purely inflationary.
The previous session's biggest fallers bounced slightly, with miners <.FTNMX1770> and banks <.FTNMX8350> higher as investors bought in early on the dips but broader macro concerns kept the appetite for risk at a premium.
Judging by the European dataflow, the post LTRO rebound in sentiment has come to an end and the reality of the hard slog that Europe faces is now beginning to set in, Deutsche Bank said in a note.
Investors in HSBC do not face financial ruin - just a further extended period of underperformance. How much more pain are you prepared to take? said Investec Securities in a note repeating its hold rating on the global lender.
The UK's benchmark index is down 1.6 percent this week but remains in a tight range that has been in place since early February, but the index has risen around 14 percent since its November lows leaving investors looking for the next catalyst to drive the index higher.
Blue chip stocks, however, no longer look expensive, according to their relative strength index, and the FTSE 100 has found support around its 50-day moving average.
Pension deficits remain a concern for investors. UBS said in mid 2011 the total pension liability for the FTSE 100 was around 450 billion pounds, but if bond yields were to rise that deficit could start to reduce, with the rule of thumb being a 1 percent rise in real yields pushes liabilities down by 10 percent.
U.S., UK and German government bond yields have been drifting higher lately as a weak growth picture in the euro zone was expected to keep safe haven demand underpinned.
UBS said on a crude measure Thomas Cook
International Airlines Group
High street retailers were on the rise too, shrugging off poor UK retail sale data in the previous session, as brokers such as Deutsche Bank, UBS and Barclays raised their target prices for Next
Next and Kingfisher each rose 1.4 percent, while sentiment was helped as retail bellwether John Lewis said last week's volume of trade was a March record as sunny weather, an earlier Mother's Day and the launch of the new iPad encouraged shoppers to part with their cash.
On the downside, Rangold Resources
Randgold Resources has said its operations in Mali were running normally.
(Written by David Brett; Editing by Mike Nesbit)