Disappointing mobile phone sales figures from BT and a large sell order in the futures market spoiled an early strong run by UK equities.
The FTSE 100 index had reached its best level of the day, up 126.7 at 5,279.8, on the back of a strong opening on Wall Street.
But within 90 minutes of the session's high, the Footsie had dropped into a loss for the day.
BT's mobile arm said its customer growth in the second quarter had largely come from less profitable pre-pay subscribers. The news sent BT down 9.3 per cent for the day and also prompted Vodafone shares to shed 2.8 per cent. With the big futures trade weighing on prices, only the Dow's continued strength allowed the FTSE 100 to close with a modest 11.8 point gain at 5,164.9.
The rest of the market, however, held up much better with the FTSE 250 gaining 128.2 to 5,404.1, the SmallCap 68.5 to 2,289.2 and the Techmark 100 33.0 to 1,327.72.
Earlier, the market had shown only fleeting disappointment at the European Central Bank's decision to leave interest rates unchanged, rather than cutting by a quarter of a point as some had hoped.
And there was some disappointing domestic economic news. The British Chambers of Commerce survey of the manufacturing sector made fairly gloomy reading with the index of export sales dropping to -16 from +1 in the second quarter, while home sales fell from -1 to -3.
Until late in the session, the market had appeared to take the view that the economic impact of September 11th's terrorist attacks might not be as bad as many had feared.
An encouraging statement from Rupert Murdoch prompted a further rally in media stocks with Daily Mail, United Business and Media and BSkyB featuring in the list of the Footsie's best performing stocks.
But the late slippage in the market may indicate that investors are still nervous about the potential for bad news.
Traders said the markets were uncertain about the outlook for the next week or so. Turnover was heavy, with 3.14 billion shares traded by the 6 p.m. count.
