Uncertainty over whether US political rivals will agree a crucial spending and taxation deal drove a volatile run on the London market.
Fears that the US risks slipping into recession if hundreds of billions of dollars in expiring tax cuts and automatic spending reductions are allowed to take effect saw the FTSE 100 Index close 2.4 points lower at 5767.3.
London’s leading shares index fluctuated in and out of the red throughout the session as optimism over the likelihood of Democrats and Republicans striking a deal ahead of the January 1 fiscal cliff deadline wavered.
Meanwhile, the mood was dampened by figures on Japan’s economy, which contracted by 0.9% in the third quarter and now looks likely to go into recession in the final three months of the year.
The pound fell against the US dollar to 1.58 as the greenback benefited from its perceived status as a safe-haven investment amid times of uncertainty. Sterling also dropped against the euro to 1.24 as the single currency was boosted after Greece approved its 2013 austerity budget.
The biggest Footsie risers were Admiral up 38p at 1092p, Lloyds Banking Group ahead 1.5p at 45.1p, Polymetal up 35p at 1149p and Burberry ahead 30p at 1247p.
The biggest Footsie fallers were Anglo American down 38.5p at 1827.5p, G4S off 4.7p at 248.7p, Amec down 19p at 1030p and BG Group off 16.5p at 1040.5p.
