Britain's top equity index ended flat on Thursday as easing concerns over China's economy helped to offset the impact of falling oil prices and a large number of ex-dividend companies. A stronger US dollar and a persistent global overhang of physical oil pushed crude prices lower on Thursday. Energy companies took the most points off the index, with Royal Dutch Shell and BG Group closing down 3 and 1.8 percent respectively.
"Its still a bit indecisive, but I think we will see oil moving lower, which won't be any good news for the energy stocks," said Chris Beauchamp, strategist at IG. "They've taken it very hard over the last couple of months and that's probably going to continue to be the case." Also dragging down the FTSE were companies trading without the attraction of their latest dividend payment, including Shell and BG as well as Rio Tinto BT and Pearson .
Among other fallers, G4S - the British company whose services include running prisons and protecting airports - dropped 5.4 percent after both Goldman Sachs and Exane BNP Paribas cut their ratings on the stock. The blue-chip FTSE 100 index closed down 2.86 points - flat in percentage terms - at 6,568.33, trimming the gains seen earlier in the session and underperforming broader European equities. The index had fallen by more than 2 percent in the previous two sessions, hit by Beijing's devaluation of the yuan on Tuesday.
However, stock markets in Asia and Europe bounced back after China's central bank said on Thursday that strong economic fundamentals meant there was no reason for the currency to weaken further. "They're taking the Chinese central bank at its word, but I'm still taking those comments with a pinch of salt," said Richard Perry, an analyst at Hantec Markets. "Selling short-term rallies on the FTSE would still seem to be a sensible strategy to play."
Among the gainers, soft drink bottler Coca-Cola HBC enjoyed its best day on record, surging 7.3 percent after reporting first-half net profit ahead of analyst estimates. Credit Suisse raised its target price for the stock to 1400 pence from 1350 pence. "The group's margins look set to be rather better than we thought for the full year and we raise our estimates accordingly," Credit Suisse analysts said in a note.
Travel group TUI climbed 6.6 percent after the company forecast earnings at the top end of analysts' expectations. Among mid-caps, Cineworld shares touched an all-time high and closed up 7.4 percent after the cinema operator said it was marginally ahead of its plans for the year and that the film release programme for the second half of 2015 was encouraging. The FTSE rose to a record 7,122.74 points in late April but has since given up most of the gains it made in 2015.