At the close, the FTSE 100 was 25.23 points lower at 5,473.48, having lost 0.7 per cent on Tuesday following China’s decision to tighten banks’ reserve requirements.
“The market is still a little bit all over the place, spooked slightly by the Greek prime minister’s comments ... that the country can go its own way without the IMF, and by a drop back by crude after a jump in inventory data”, said Nick Serf, market analyst at City Index.
Greek prime minister George Papandreou said Greece will not quit the euro zone or seek help from the IMF – indicating the country would attempt to manage its own fiscal problems but suggesting there may still be uncertainty on whether it can weather the storm.
“But investors are still happy to buy on the dips and this keeps the market bouncing around,” Serf added.
Energy issues were depressed for a second successive session, weighed down by sharp falls in the crude price, off 1.9 per cent to below $79 a barrel after a US oil inventory report showed stockpiles rose last week.
Royal Dutch Shell was the worst off, down 1.8 per cent as a number of analysts reduced their forecasts for the oil major’s fourth-quarter earnings. Morgan Stanley downgraded its rating for the Anglo-Dutch firm.
Peers BP, BG Group and Tullow Oil shed 0.3 to 1.1 per cent.
Miners saw an earlier rally reversed with metal prices weaker again after China’s monetary tightening move on Tuesday, coupled with recent disappointing fourth-quarter earnings numbers from US aluminium producer Alcoa.
Gold miner Randgold Resources was the biggest FTSE 100 faller, down 2.8 per cent, while Lonmin, Fresnillo, Xstrata, Vedana Resources, and Rio Tinto were off 0.5 to 2.0 per cent.
Banks came under pressure after a profit warning from France’s Societe Generale and as investors continued to mull the impact of a potential US government levy on banks.
HSBC, Barclays and Standard Chartered lost 0.3 per cent to 1.5 per cent. But part-nationalised lenders Lloyds Banking Group and Royal Bank of Scotland managed to rally, up 0.1 and 2.4 per cent respectively.
US blue chips were up 0.3 per cent by London’s close as investors awaited the forthcoming deluge of fourth-quarter earnings reports.
Drug majors went in opposite directions. AstraZeneca gained 1.1 per cent as Credit Suisse hiked its rating to “neutral” from “underperform”.
But GlaxoSmithKline fell 1.2 percent as Credit Suisse cut its rating to “underperform” on concerns potential benefits from the pandemic flu outbreak have been overstated.
Other stocks featured on the gainers board, with telecoms firm BT Group, gas utility Centrica and can maker Rexam up 0.8 to 2.1 per cent.