Britain's leading shares added 0.1 percent on Friday in very quiet trading, which saw small gains in energy issues and drugmakers just offset weakness in miners and banks. At the close, the FTSE 100 index was 7.23 points higher at 5,161.87 having moved in a narrow 40 point trading range.
For the week, however, the index was up around 3.3 percent, recovering from a fairly cautious start to the month. "Markets were a bit quieter at the end of a fairly active week, with a rally by the quality stocks, particularly the banks and the miners, coming to a halt, and interest limited by a lack of fresh direction," said Sam Wright, equity trader at Spreadex.
Weak miners were a drag on blue chip sentiment as metals and gold prices retreated as a strengthening dollar made commodities more expensive for investors. Eurasian Natural Resources, Antofagasta, Lonmin and Xstrata lost between 0.3 and 1.3 percent. Platinum group Johnson Matthey also suffered, down 2 percent.
The US dollar rose after Federal Reserve Chairman Ben Bernanke indicated an exit strategy from quantitative easing and low interest rates as the economy improves. Banks were mostly lower, with Lloyds Banking Group, Royal Bank of Scotland, and Standard Chartered losing 0.3 to 1.3 percent. However HSBC and Barclays bucked the sector trend, up 0.7 and 0.3 percent.
Pressure remained on Lloyds Banking Group and RBS as the Financial Times said the British government is to start examining their loan pricing mechanisms, suspecting that they are pricing loans to small and medium-sized businesses at levels which are unaffordable for most smaller institutions.
Mobile telecoms heavyweight Vodafone was also a big drag on the blue chips, shedding 1.6 percent, extending recent falls on concerns over a price war among Indian mobile firms. Search software firm Autonomy was the top FTSE 100 faller, down 2.4 percent as brokers chewed over Thursday's third-quarter trading update with Piper Jaffray cutting its stance to "neutral" from "overweight" mainly on valuation.
The energy sector was firmer as crude prices held above $71 a barrel. Royal Dutch Shell, BG Group, and Cairn Energy added 0.1 to 1.7 percent, but BP and Tullow Oil lost 1.71 to 0.6 percent, respectively. The Canadian and Alberta governments have promised C$865 million to ($823.8 million) help Royal Dutch Shell develop carbon capture and storage at its oil sands processing plant, as they seek to meet goals to cut emissions and curb global warming.
Drugmakers extended recent gains with AstraZeneca and GlaxoSmithKline up 0.4 and 0.7 percent respectively, while Shire , which missed out on Thursday's rally, added 0.5 percent. Intercontinental Hotels added 1.5 percent helped by upbeat third-quarter results from US peer Marriott International, while Whitbread rose 1.6 percent aided too by an upgrade to "overweight" by Barclays Capital.
On Wall Street, US bluechips were 0.4 percent higher by London's close on Friday as investors snapped up technology shares following upbeat broker comments on such bellwethers as Apple. On the macro front, the US trade deficit was $30.71 billion in August, down from a slightly revised $31.85 billion gap in July and below-estimates for a rise to $33 billion.
The UK trade gap, released on Friday was also lower than forecast at 6.24 billion pounds, the smallest since June 2006. But UK factory gate inflation unexpectedly turned positive for the first time in five months, with non-seasonally adjusted output prices up 0.5 percent in September, taking the annual rate of wholesale inflation to 0.4 percent.