BLUE-CHIP gas and electricity provider SSE sent shockwaves through the energy sector after pledging to freeze household bills until January 2016.
The move sent rival and British Gas parent Centrica into the red amid calls by Energy Secretary Ed Davey for other firms to consider doing the same.
The wider FTSE 100 Index pared back early session gains, closing 0.4 points higher at 6605.3, having initially made headway on hopes that China will introduce pro-growth measures to bolster its slowing economy.
In currency markets, the pound gained a cent to just over 1.20 euros, with the single currency weaker after European policymakers on Tuesday signalled the potential for further monetary easing to avoid deflation in the eurozone. Sterling held firm at 1.66 US dollars as the pound's strength showed no sign of easing.
Insurers led gains after the investments arm of Standard Life unveiled a deal to buy Ignis Asset Management from Phoenix Group and Legal & General won a £3 billion bulk annuity contract with the ICI pension fund.
Standard's shares rose 26.2p to 400p and L&G lifted 5.3p to 214.8p, while Aviva was 8.7p higher at 489.8p.
The £4.2bn sale of another tranche of the Government's holding in Lloyds Banking Group triggered a 3.9p fall in the company's share price to 75.2p.
The stock slipped back below the 75.5p sale price secured from institutional investors for 24% of the Treasury's remaining shares in the bank.
The sale cut the Government's ownership to just under 25% from 33% previously.
In the energy sector, Southern Electric and Scottish Hydro owner SSE rose 20p to 1518p as the likely £100 million cost of its pledge to freeze prices was offset by plans for more operational efficiencies and a vow to simplify its focus onto core assets.
SSE's supply profit margins could fall from their usual level of around 5% to as low as 2.5%, but the impact of a price war on Centrica had a much greater bearing on the British Gas owner as its shares slid 9.4p to 323.1p.
The announcement by SSE came ahead of the result of an Ofgem probe today, which is widely expected to result in the sector being referred for a full-scale two-year competition investigation.
Elsewhere, shares in floor coverings retailer Carpetright were down 5% or 30p to 556.5p after it warned on profits for the third time in six months.
It said underlying profits for the year to the end of April will be in the range of £3.5m to £5.5m, against £9.7m a year earlier.
The biggest FTSE 100 risers were Standard Life, Hargreaves Lansdown, up 75p to 1481p, Aberdeen Asset Management, 13.9p higher at 387.3p and Burberry, 47p stronger at 1425p. The biggest fallers were RSA Insurance, down 7.4p at 87.8p, Lloyds Banking Group, Centrica and Randgold Resources, off 102p at 4608p.