The FTSE-100 Index surrendered earlier gains after worrying figures on the US economy overshadowed encouraging data from Asian powerhouse China.
It closed just 4.4 points higher at 5871.2 after the US manufacturing purchasing managers' index fell to 49.5 in November from 51.7 in October – a sign of contraction in the sector.
London's leading shares index had been higher earlier after manufacturing PMI figures from China indicated the first expansion in the sector in 13 months.
Loading article content
An improvement in China would offer a boost to the world economy in the face of Europe's debt crisis and fears of stagnation in the US.
Activity in the UK manufacturing sector was also encouraging, with the latest Markit/CIPS purchasing managers' index reading of 49.1 for November being better than a month earlier, although still below the 50 that represents expansion.
The signs of a pick-up in the Chinese economy following a period of sluggish growth propped up oil prices, with benchmark crude for January delivery up 1% at 90 US dollars a barrel in New York.
The pound was higher against the US dollar at 1.60 as the greenback was hit by the manufacturing figures. Sterling was lower against the euro at 1.23.
Among the mining stocks in London, hopes of improved Chinese demand ensured copper producer Kazakhmys lifted 2p to 715.5p and Rio Tinto added 26.5p to 3120p.
Other big risers in the top flight included ITV as the broadcaster continued to benefit from signs of resilience in the advertising market and an improved performance for its production division.
Shares languished below 70p in the summer but topped the £1 mark yesterday after a rise of 1.5p to 100.4p.
Rival broadcaster BSkyB was also doing well, up 13p to 772p.
Retailers failed to benefit from the positive start to the week, however, with Sainsbury's among those on the fallers board after a drop of 4.7p to 336.7p.
Morrisons dropped 2.6p to 266.2p, while B&Q owner Kingfisher was off 2.7p at 275.3p and Marks & Spencer shed 0.9p to 389.7p. Next declined 22p to 3639p and Dixons Retail eased 0.5p to 26.9p in the FTSE-250 Index.
The biggest FTSE-100 risers were Melrose Industries up 6.2p at 219.3p, BSkyB ahead 13p at 772p, Rolls-Royce up 15p at 905.5p and Schroders ahead 25p at 2621p.
The biggest fallers were Hargreaves Lansdown down 20.5p at 736.5p, Lloyds Banking Group off 0.8p at 45.7p, Evraz down 3.4p at 230.8p and Sainsbury's off 4.7p at 336.7p.