Comments from finance minister Philip Hammond lifted the pound, weighing on shares in export-oriented firms, although gains among oil majors on rising crude prices provided support.

The FTSE 100, whose companies make 70 percent of their earnings from abroad, added 0.1 percent by 0832 GMT, while the domestically focused mid cap index rose 0.7 percent.

"All eyes on sterling over the next few days as the pound will remain sensitive to news from the Conservative conference," said Peel Hunt economist Ian Williams.

Hammond said the UK had the fiscal capacity to cope with leaving the European Union without any agreement but believed the mood in Brussels was to reach a divorce deal.

His comments lifted the pound and that in turn sent shares in big multinationals BAT, Compass Group and Shire down between 0.5 and 1.2 percent.

Oil companies Shell and BP both rose more than 0.5 percent, as Brent prices rose to their highest since November 2014 ahead of US sanctions against Iran.

Airlines, which have recently been hit by rising oil prices which could increase their fuel costs, were under further pressure after a profit warning from Ryanair.

Europe's largest low-cost carrier cut its forecast for full-year profit by 12 percent and said there could be worse to come if recent coordinated strikes across Europe continue to hit traffic and bookings.

Its London-listed shares fell 8.4 percent, wile FTSE-listed rivals easyJet and British Airways owner International Airlines Group fell 4.3 and 1.6 percent respectively.

Housebuilders were another weak spot.

Berkeley Group, Barratt Developments and Persimmon were among the top fallers on the FTSE, all down over 1 percent on plans by the Conservative Party to levy an extra fee on foreign buyers of homes in Britain.

"The UK PM has plans to impose higher taxes on foreign buyers of UK properties, roughly half of all residential transactions in Central London, which could weigh on FTSE housebuilders," said at Accendo Markets analyst Mike van Dulken.

United Utilities rose 2.6 percent after a Deutsche Bank upgrade to buy.

Among the smaller companies, Avocet Mining dropped 17 percent after warning that it could be broken up as the gold miner continues talks with its largest shareholder to restructure its debt.

Just Group fell 9 percent after the British pensions provider said its finance chief would step down at the end of the month, days after proposed regulatory changes forced the company to delay dividend payments.