London’s blue chip share index made modest gains after eurozone finance ministers agreed a bailout deal for stricken Greece.
But investor confidence was knocked after respected thinktank, the Organisation for Economic Co-operation and Development (OECD), cut its growth forecasts for the UK and warned eurozone woes and a failure to prevent America’s co-called fiscal cliff could trigger a global recession.
Early session falls on the Dow Jones Industrial Average in the US pared back gains on the FTSE 100 Index, which closed 13 points ahead at 5799.7.
The FTSE 100 had been more than 30 points higher at one stage after the crucial eurozone deal was struck late yesterday, which will see Greek debt cut by 40bn euros, paving the way for around 44bneuros of bailout cash to be released.
Despite the gloomy forecast from the OECD, there was some reassuring news for the UK economy after the Office for National Statistics kept its estimate for 1% growth in the third quarter unchanged.
This helped the pound rise to nearly 1.24 euros, although sterling slipped to $1.60.
The biggest FTSE 100 risers were Royal bank of Scotland up 10p to 295.1p, Capita ahead 23p to 751p, Lloyds Banking Group 1.3p higher at 46.4p and BAE Systems up 7.7p to 319.7p.
The biggest FTSE 100 fallers were Aberdeen Asset Management down 7.4p to 328.6p, Pearson off 16p to 1168p, Johnson Matthey 27p lower at 2269p and BG group down 11.5p to 1060p.