Continued fears of a Greek exit from the eurozone saw London’s top-flight index hit a five-month low in early trading before staging something of a recovery by the end of the session.
The FTSE 100 Index finished the day down just 0.42 points at 6,710.1, while the pound held firm against the dollar after official figures showed inflation returned to the UK after a one-month absence.
Angus Campbell, senior analyst at FxPro, said there was “palpable apprehension” in the air as Greece struggles to repay International Monetary Fund loans.
Campbell added: “So for now many investors are in wait and see mode, whilst others are shedding their exposure to riskier assets.”
Among equities, defensive stocks benefited from the market jitters, with British American Tobacco topping the blue-chip risers’ board with a gain of 99.5p or 3 per cent to 3,511p and rival Imperial Tobacco climbing 71p to 3,246p.
Housebuilders were also on the up, despite official data revealing a slowdown in the property market in April. Barratt added 13.5p at 609.5p, and Taylor Wimpey rose 3.5p to 186.9p.
Outside the top tier, fellow builder Crest Nicholson finished the day 11.5p higher at 556p as it benefited from upbeat first-half results that showed a 52 per cent jump in pre-tax profits to £58.3 million.
Royal Mail recovered from early falls after communications watchdog Ofcom launched a “fundamental review” following the withdrawal of rival Whistl from the direct delivery letters market. The regulator is to look at how best to ensure efficiency in the absence of national competition as well as whether wholesale and retail prices are both affordable, but shares in the former state-owned firm closed up 1.5p at 506.5p.