Ongoing political wrangling in the States limited gains for stocks on Thursday though the FTSE 100 still managed to snap a four-day losing streak to finish slightly higher.
However, markets were rangebound as investors digested mixed economic data from across the globe with service-sector activity improving in China and the Eurozone but weakening in the UK and US.
The FTSE 100 finished 11.54 points higher at 6,449.04. "The FTSE has been in positive territory for most of the day, as a mixture of short-covering and bargain-hunting has kept stock in demand," said David Madden, Market Analyst at IG.
Debt ceiling in focus as budget impasse continues
The partial shutdown of the US government extended into its third straight day today as politicians continue to fail to come up with a solution to the budget.
Markets are hoping that Congress will agree to raise the $16.7tn debt limit by the October 17th deadline to prevent the US government defaulting on its obligations, something that the Treasury Department said could have a "catastrophic effect" on all aspects of the US economy.
It said in a report today that a default could lead to "events of the magnitude of late 2008 or worse".
"Not only might the economic consequences of default be profound, those consequences, including high interest rates, reduced investment, higher debt payments, and slow economic growth, could last for more than a generation," the Treasury said.
PMIs in focus
China's official non-manufacturing purchasing managers' index rose from 53.9 to a six-month high of 55.4 in September, according to the National Bureau of Statistics, strengthening the third-quarter outlook for the world's second-largest economy.
Closer to home, the final reading of the Eurozone services PMI for September unexpectedly picked up to 52.2, surprising analysts who had expected no change (52.1).
The UK services PMI eased from 60.5 to 60.3 last month (forecast: 60.5). However, analyst Blerina Uruci from Barclays said that the data "was broadly stable and remained consistent with a solid pace of expansion".
Meanwhile, the ISM survey measuring non-manufacturing activity in the US fell from 58.6 to 54.4 (forecast: 57) following a sharp surge the month before. "To be honest, that jump in August always looked a little suspicious, but we didn't expect such a big reversal," said Chief US Economist Paul Ashworth from Capital Economics.
FTSE 100: Miners track metals lower
Continuing uncertainty surrounding US politics and falling metal prices weighed heavily on mining stocks on Thursday as investors shrugged off some improving economic data from China. Copper, silver and gold prices
were on the decline today, weighing on the outlook for demand for resource stocks. According to Alex Young, Senior Sales Trader at CMC Markets, "global analysts are expecting further potential drops should uncertainty in the States continue".
Fresnillo, Vedanta and Anglo American were among the worst performing stocks on the FTSE 100 by the close of trade, along with Glencore Xstrata, Randgold and BHP Billiton.
Supermarket group Tesco was a high riser, rebounding after a subdued reaction to its interim results yesterday. Analysts at Citigroup upgraded their rating for the group today from 'sell' to 'neutral', saying that negatives have already been priced in to the stock.
Telecoms group Vodafone gained on the news that its Chief Financial Officer is set to depart the once the sale of Verizon Wireless has completed. Andy Halford, who has commanded the company's finances for almost nine years, will exit in March when Verizon Communication will take full ownership of the business.
Consumer goods giant Unilever was also heading north, rebounding after heavy falls on Monday when it warned about slowing growth in the third quarter.
Oil major BP share price also headed higher after the decision by the US appeals court to halt some payments related to claims over the giant oil spill in the Gulf of Mexico back in 2010.
Sports Direct International was in the red after its Chief Executive Dave Forsey and Finance Director Bob Mellors each netted £6.4m after selling shares
from a bonus plan.
FTSE 100 - Risers
Unilever (ULVR) 2,367.00p +2.07%
Tesco (TSCO) 365.00p +1.96%
GlaxoSmithKline (GSK) 1,571.00p +1.58%
RSA Insurance Group (RSA) 119.90p +1.44%
Vodafone Group (VOD) 222.00p +1.39%
Aviva (AV.) 413.10p +1.37%
TUI Travel (TT.) 369.80p +1.37%
BP (BP.) 437.15p +1.12%
Aberdeen Asset Management (ADN) 378.00p +1.07%
British Sky Broadcasting Group (BSY) 881.50p +0.92%
FTSE 100 - Fallers
Vedanta Resources (VED) 1,059.00p -2.84%
Fresnillo (FRES) 910.00p -2.67%
CRH (CRH) 1,466.00p -2.01%
Anglo American (AAL) 1,472.50p -2.00%
Intertek Group (ITRK) 3,201.00p -1.99%
Weir Group (WEIR) 2,261.00p -1.95%
Aggreko (AGK) 1,479.00p -1.92%
Smiths Group (SMIN) 1,356.00p -1.88%
Wolseley (WOS) 3,196.00p -1.66%
United Utilities Group (UU.) 694.50p -1.49%
FTSE 250 - Risers
Supergroup (SGP) 1,182.00p +3.59%
Mitchells & Butlers (MAB) 400.10p +2.77%
Catlin Group Ltd. (CGL) 486.90p +2.68%
Fenner (FENR) 400.90p +2.66%
FirstGroup (FGP) 123.70p +2.49%
Close Brothers Group (CBG) 1,225.00p +2.42%
Ladbrokes (LAD) 171.20p +2.27%
Ocado Group (OCDO) 403.00p +2.08%
Amlin (AML) 412.50p +2.03%
COLT Group SA (COLT) 121.40p +2.02%
FTSE 250 - Fallers
Imagination Technologies Group (IMG) 306.30p -5.75%
Diploma (DPLM) 632.50p -3.80%
Chemring Group (CHG) 284.80p -3.62%
Ted Baker (TED) 1,851.00p -3.59%
Alent (ALNT) 341.10p -3.51%
Polymetal International (POLY) 626.00p -3.40%
RPS Group (RPS) 264.70p -3.36%
Rathbone Brothers (RAT) 1,505.00p -3.22%
Kazakhmys (KAZ) 254.10p -3.02%
African Barrick Gold (ABG) 154.40p -2.83%