Britain's leading shares ended flat on Thursday as British Airways soared on consolidation hopes, while Smith & Nephew weighed after an internal probe into its sales practices.
The FTSE 100 ended unchanged at 6,087.3 during a choppy session, light in volume, after hitting a high of 6,118.2.
With major continental European stock markets closed for May Day, the FTSEurofirst 300 of top European shares was unofficially up 0.1 percent at 1,339.02.
Leading the charge on the upside, airline British Airways added 7.3 percent after the airline said late on Wednesday it was in discussions with two of its largest U.S. rivals, American Airlines and Continental Airlines, which a source briefed on the matter said was about a potential alliance.
Miners were mostly in demand, with Kazakhmys up 2.1 percent after it said it aims to triple power output by 2014 at its new Ekibastuz coal-fired power plant, the largest in Kazakhstan.
Vague merger and acquisition chatter also buoyed the sector, with Xstrata and Anglo American rising between 2 and 2.2 percent.
Rexam advanced 4.4 percent after the company, the world's biggest drinks can maker, said first-quarter results were in line with its expectations at constant currencies, and that its outlook for the rest of the year remained unchanged.
Global news and information company Thomson Reuters tacked on 3.3 percent after it posted first-quarter profits, forecast 2008 revenue growth of 6 to 8 percent and said it would reach a cost-savings target ahead of schedule.
On the economic front, the Bank of England said the scale of losses and the economic fallout from the credit crunch may not be as bad as feared, and subprime write-offs could end up costing less than half market forecasts.
Earlier in the session, the UK blue-chip index was little affected by data showing that growth in Britain's manufacturing sector slowed in April.
After the widely expected quarter-point rate cut to 2 percent by the U.S. Federal Reserve on Wednesday, investors will now look to U.S. non-farm payrolls for April due on Friday for future market direction.
"The worst is behind us rhetoric continues to flow from central bankers on both sides of the Atlantic," said David Evans, a market analyst at BetOnMarkets.com.
"Markets are for the moment at least holding ground after yesterday's post FOMC announcement ... and traders are taking an 'I'll believe it when I see it' approach today."
"Although today's buying is welcome, we won't see any significant momentum until tomorrow's all important U.S. jobs report is out of the way."
S&N Warns and Falls
Shares in Europe's biggest medical device maker, Smith & Nephew, sank 13 percent after it disclosed that an internal probe had turned up unacceptable sales practices at a newly acquired unit, warning the problems would hit sales and profits in 2008.
The company has hired outside legal and accounting experts to look into a Plus Orthopaedics, the Swiss company it bought last year for nearly $1 billion.
UK real estate stocks also lost ground, with Hammerson, Land Securities, Liberty International and British Land down 0.8 to 2.6 percent, after Deutsche Bank issued a downbeat note on the sector.
Kingfisher slipped 1.4 percent to 131 pence after Goldman Sachs reduced its rating on the retailer to "sell" from "neutral" and cut its price target to 110 pence from 137 pence.
Britain's biggest household goods retailer Home Retail was 2.8 percent lower.