Britain's top shares finished flat on Thursday with online gaming firm PartyGaming surging to a 3-month high after it said it expected to beat 2005 earnings forecasts thanks to more poker players and a popular blackjack game.
But new FTSE 100 entrant P&O fell as doubts grew over the likelihood of a bidding war for the iconic British ports operator.
The FTSE 100 closed 2.3 points higher at 5,531.1 points, having earlier tumbled below 5,500 points from Wednesday's 52-month high of 5,574.
"We have seen this a few times in the current upswing - whereby we have pushed through to new highs and then take a pause for thought," said Alex Scott at Seven Investment Management.
PartyGaming jumped more than 16 percent on the back of an encouraging trading update in a sector riddled with worries over growth prospects. Of particular note for investors was the success of the new blackjack game.
"The speed of the take-up has surprised us, the market, and the company," said investment bank Morgan Stanley in a research note, raising its earnings per share forecasts for 2006 and 2007 by 10 and 8 percent respectively.
"Party is now the world's largest online casino as well as poker operator."
On the downside, P&O - which entered the FTSE 100 on Thursday following a rejig - fell 2.8 percent to 480 pence as concern grew that Dubai Ports World's 443p-a-share agreed offer would be the only bid for the firm with a move from Singapore's Temasek now unlikely.
"Punters are selling because they thought this time last week they were only going to get 443p," one trader said.
State-backed Dubai Ports World's buyout of the 165-year-old British maritime icon would create the world's third largest ports operator.
The banking sector weighed heaviest on the index, contributing almost 10 points to losses, with Asia-focused bank Standard Chartered falling 1.7 percent in line with broadly weaker Asian equity markets and as analysts cut their forecasts after the bank's trading update on Wednesday.
Dresdner Kleinwort Wasserstein cut its rating on the stock to "reduce" and suggested investors switch into HBOS or RBS.
"UK domestic banks trade at 9.6 times 2006 earnings and 9 times 2007 earnings," it said in a note. "Standard is on a premium of almost 50 percent."
The world's largest heating and plumbing supplier Wolseley fell 2.4 percent to 1,223p with investors taking profits on a strong rally since October from around the 1,100p mark.
Food group Tate & Lyle dipped 2.1 percent as analysts warned its sucralose sweetener margins could fall by almost 40 percent to 10 percent when its patents expire.
However, gains for Marks and Spencer - which rose 3.7 percent on market talk it will delay its January sales because of continuing buoyant trading - boosted retailers such as Tesco and Sainsbury, dealers said.
Elsewhere, the oil and gas sector boosting the index, adding more than 11 points, as crude oil prices rose.
The FTSE was unmoved by a Bank of England decision to keep interest rates on hold at 4.5 percent, but analysts said the global interest rate environment could provide investment opportunities, with Europe apparently at the start of a tightening cycle, the US cycle peaking and the UK potentially facing another rate cut.
"It should create opportunities for investors who are looking at asset allocation, currency calls rather than individual stock calls," Seven's Scott said.
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