The FTSE 100 Index briefly moved back above the 5800 level today before closing less than a point below its opening mark.
The uncertain session came despite strong gains on Wall Street overnight and signs from the Bank of England that growth and inflation in the UK should be steady over the next two years.
Airports group BAA tried to offer some direction as it soared more than 4% amid increased bid speculation but the Footsie closed down 0.8 points at 5791.5.
BAA shares built on the hefty gains seen last week after Spanish firm Ferrovial revealed it was mulling an offer.
The latest developments at BAA dominated the agenda as it moved 31.5p higher to 810.5p after reports linked the Singapore Government and Canadian fund manager Caisse de Depot et Placement du Quebec to the Ferrovial consortium.
Elsewhere in the aviation sector, British Airways shares shrugged off the impact of an industry-wide inquiry into alleged cargo price fixing to gain 11p to 334.5p, a rise of more than 3%.
The aviation pair topped the Footsie risers board and were followed by a clutch of mining stocks after BHP Billiton posted record half-year profits of 4.36 billion US dollars (£2.51bn). BHP shares rose 8p to 962p as the Anglo-Australian company benefited from demand in China and surging commodity prices.
Others in the sector lifted by BHP’s positive comments were Antofagasta, ahead 22p at 2011p, and Kazakhmys – up 26p at 837p.
The oil sector was also stronger following weakness yesterday, with Royal Dutch Shell ahead 2p at 1870p and BP 3.5p stronger at 646.5p.
And fellow explorers Cairn Energy and BG Group made solid gains, up 36p to 1839p and 6.5p to 665p respectively.
Online casino PartyGaming recovered some of its heavy losses yesterday, moving 1.5p higher to 125p. It was yesterday’s biggest faller as investors reacted to reports in the US about an online gambling prohibition bill. Smaller rival 888 Holdings regained 0.25p to 188p.
But banks and insurers were generally lower as some of the recent takeover speculation in the two sectors came off the boil.
This affected Lloyds TSB, which fell 2p to 548p, while Barclays was off 7p at 649.5p ahead of full-year results next week. Royal Bank of Scotland was also on the back foot, falling 8p to 1766p.
Among insurers, Prudential eased 6p to 600.5p as the stock gave back some of the gains seen last week in the wake of speculation of a merger with Norwich Union owner Aviva.
But Royal & Sun Alliance was up 0.25p to 124.5p as it stood to raise a sizeable sum from the sale of its 10% stake in property website Rightmove, which announced plans to float today. And Old Mutual lifted 6p to 187.75p after it claimed 89.5% of Skandia.
Today’s biggest blue chip risers were BAA up 31.5p to 810.5p, British Airways up 11p to 334.5p, Old Mutual 6p ahead at 187.75p and Kazakhmys 26p up at 837p.
The heaviest fallers were AMVESCAP off 16p to 522p, Reuters down 9.5p to 448.5p, Scottish Power 10.5p lower at 577p and Rexam down 7.5p to 491p.