The FTSE 100 ended up 20.85 points, or 0.4 per cent, at 5,266.06, having hit its lowest close in three weeks on Wednesday when it fell 2.4 per cent to 5,245.21.
Trade was choppy in the top index, however, as investors remained wary of the wider economic malaise, with the index fluctuating between a high of 5,273 and a low of 5,211.
The FTSE 250, meanwhile, closed down 66.18 points, or 0.67 per cent, to 9,788.31. The FTSE SmallCap index fell 16 points, or 0.57 per cent, to 2,774.71.
Volumes were low, as investors were cautious on the economic outlook following weak data on both sides of the Atlantic in August after some strong corporate data in July helped drive a 6.9 per cent gain for the month.
“After the rally in July on decent corporate data the positive newsflow has dried up and the lack of good news has left the field clear for those who think there will be a double dip recession,” said Jim Wood-Smith, head of research at Williams de Broe.
On individual issues, GlaxoSmithKline added 2.6 per cent after US advisers recommended approval of Potiga, a new epilepsy drug developed with Valeant Pharmaceuticals, which in turn led a number of defensive stocks to modest gains. Glaxo peer AstraZeneca rose 0.7 per cent, while consumer goods group Unilever climbed 1.4 per cent and British American Tobacco rose 1.0 per cent. Energy supplier Centrica was the top gainer, up 3.3 per cent.
Miners recovered from early weakness, tracking rebounding metal prices, with Rio Tinto and Xstrata both up 0.3 per cent.
Randgold Resources added 2.4 per cent as gold neared a four-week high on safe-haven buying. African Barrick Gold also put on 2.7 per cent.
India-focused mining group Vedanta Resources was the top loser, however, slipping 7.5 per cent on news it was in talks to buy assets or take a multibillion-dollar equity stake in British oil and gas exploration company Cairn Energy.
Insurers were the biggest sector drag on the index, with Old Mutual down 1.9 per cent after Goldman Sachs cuts its rating on the stock, citing weakness in the South African economy.
Aero engineer Hampson Industries tumbled 61 per cent to 20p, its lowest level since March 2003, after the firm warned full-year profit would be materially below market estimates. Bank note printer De La Rue was another high profile faller, down 10.4 per cent, due to the resignation of its chief executive. James Hussey stepped down following disappointing sales and problems with its bank note printing presses.
Meanwhile, shares in London black cab maker Manganese Bronze plunged 11 per cent after the group announced that China’s Geely had pulled out of financing plans that would have seen it take a controlling stake in the group. Geely – which already owns 23 per cent of Manganese –had been in lengthy talks over a share placing to provide Manganese with financing in return for a 51 per cent stake. But the firm stressed that its international growth plans were still on track.