Britain's FTSE-100 index ended lower after a stormy session on Wednesday, battered by high oil prices but struggling above support at 4,400 at the close, helped by benign US economic data.
Disappointing subscriber growth from BSkyB hammered the pay TV firm's shares 19 percent lower and cast a shadow over the whole market in early dealings, despite news of a two-fold increase in annual profit.
Late gains in the banks also helped the FTSE pick itself up off the floor, with Barclays rising 2 percent ahead of first-half results on Thursday and on revived talk of a possible approach from US financial giant Citigroup. Barclays declined to comment on the speculation.
The blue chip index closed 21.6 points down at 4,408.1, halving earlier losses. Traders had worried the index could retest last week's 9-month low below 4,300 when the index hit Wednesday's session low of 4,376.8.
News that new orders at US factories rose by more than expected in June along with an above-forecast rise in the US Institute for Supply Management's non-manufacturing index gave the market some comfort after recent patchy US economic data.
"The US data gave us a big upside surprise. We had a shock today in the form of BSkyB but the shocks have been few and far between," said Robert Parkes, UK Equities Strategist at HSBC Securities.
Martin Dobson, Senior Dealer at brokers Hoodless Brennan, said he was concerned that the market might be back on a downward spiral after the recent painstaking rally.
"It's back over 4,400. It would be nice to remain above that level ... but with (UK) interest rates set to go up 1/4 point tomorrow there's potential for more downside tomorrow," he said.
A decision on UK interest rates is due from the Bank of England at 1100 GMT on Thursday.
Insurer Aviva delivered another disappointment to the market, slipping 3.1 percent after it reported a drop in long-term investment returns and struck a more cautious note than rivals on prospects for the UK savings market, where consumer demand remains subdued.
Fixed-line telecoms firm BT Group fell 4.2 percent as it went ex-dividend along with British American Tobacco and GlaxoSmithKline. When a share trades "ex-div" new investors no longer qualify for the latest payout.
British Airways had a bumpy ride, closing 1.9 percent lower at 224-3/4 pence, but only after touching a low of 218-1/2p on rumours that a UK to United States commercial flight had gone missing. British and US air traffic controllers later quashed the speculation.
Mid-cap shares were hit hard, with telecoms testing equipment firm Spirent sliding 9.5 percent ahead of its half-year results expected on Thursday.
Mid-cap online retailer Lastminute.com fell 6 percent after InterActiveCorp, owner of rival firm Expedia.com, cut its forecast for 2004.
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