Britain's leading share index traded flat early on Friday, with gains by pharmaceuticals offset by losses in commodity stocks and banks as investors stayed cautious on prospects for a sustained economic recovery.
By 0804 GMT the FTSE 100 was 3.90 points higher at 4,4465.77 after closing up 25.12 points at 4461.87 on Thursday.
The index is up around 29 percent since hitting a six-year trough in March, but has held in a tight range between about 4,400 and 4,500 for the last month.
"Things are fairly quiet, we are just hoping to see if this rally is something a bit more than a bear market rally," said Micky Mahbubani, strategist at IG Index.
"The trend this week has been perceived increased appetite for risk. Data yesterday in terms of U.S. retail sales and labour markets in the U.S. seem to be a bit more positive than the market expected," Mahbubani said.
BT Group was the top UK blue-chip gainer, up 4.4 percent after Banc of America Merril Lynch upgraded the telecom group to "buy" from "neutral" and increased its target price.
Asian shares gained on Friday, supported by data showing China's industrial output rose more than expected in May, but softer commodity prices indicate demand is cooling as risk appetite ebbs slightly.
Oil majors were the biggest drag on the index after the price of crude fell towards $72 a barrel, ending a three-day rally. Oil peeked at over $73 on Thursday, its highest since Oct. 20.
BP, Royal Dutch Shell, BG Group, Tullow Oil and Cairn Energy were lower by 0.6 and 2.2 percent.
BANKS MIXED
Barclays fell 1.9 percent after it confirmed a deal to sell its investment arm BGI to BlackRock Inc. for $13.5 billion, in a blockbuster deal that will create the world's biggest asset manager.
"Gone are the days when bank boards thought diversifying into asset management would offset the volatility of investment banking earnings — now there will be a pack of hungry M&A advisers looking at other banks' investment arms," Manoj Ladwa, senior trader, ETX Capital said in a note.
Other banks were mixed with Lloyds Banking Group and Royal Bank of Scotland up 2.4 and 3.8 percent, heavyweight HSBC trading flat and Standard Chartered down 1 percent.
Lower commodity prices pushed down shares in mining companies. Antofagasta, Kazakhmys, Eurasian Natural Resources, Anglo American, and Lonmin were down 0.1-1.1 percent.
Shares in Rio Tinto fell 0.8 percent, while BHP Billiton rose 0.4 percent after Australia's government gave cautious support for the two miners' planned iron ore joint venture but a newspaper reported that China had threatened sanctions against the two if the deal went ahead.
Pharmaceutical companies added the most points to the index as investors shifted into the defensive sector, with GlaxoSmithKline up 1.2 percent.
The pharmaceuticals group said it is planning to cut prices of many of its leading medicines in emerging markets, CEO Andrew Witty told the Financial Times.
Astrazeneca rose 1.9 percent.
