The FTSE-100 Index rose 16.6 points to 6500 yesterday but it was a small bounce-back compared to the 100-point slump seen during the previous day.
Growing anxiety that quantitative easing (QE) on the other side of the Atlantic will begin to be tapered off from next month amid signs of economic recovery are haunting markets both in the City and on Wall Street.
On Thursday night, New York's Dow Jones Industrial Average closed 1.5% down although it also appeared to be levelling off yesterday, and was flat in early trading.
In Europe, Germany's Dax improved slightly while there were larger gains for France's Cac 40.
Fears of an end to stimulus measures mean that encouraging economic data is being interpreted negatively by the markets, with good news sparking fears that the US Federal Reserve will accelerate the timetable for withdrawing QE.
Fixed income interest rates have risen to their highest levels since 2011, fuelling investor fears that this could act as a brake on the recent improvement in economic activity.
Matt Basi, head of UK sales trading at CMC Markets UK, said: "After Thursday's sell-off in the wake of better than expected jobless claims data, we appear to be back in good news is bad news territory."
In London, some of the stocks which have suffered falls in recent days were consolidating in a calmer session for the market.
They included builders, whose shares have been hit by fears that details of the Bank of England's "forward guidance" policy unveiled last week on maintaining low interest rates may instead see them rise earlier than expected.
Persimmon, which is due to report results next week, pulled back from a recent decline with a rise of 8%, or 91p, to 1188p, as traders took advantage of the share price value on offer.
Meanwhile, in the FTSE-250 Index, Barratt Developments was up 11.7p to 312.9p with Bovis Homes climbing more than 7%, or 55p, to 778.5p and Berkeley Group up more tan 5%, or 117p, to 2203p.
William Hill was one of the biggest fallers in the top flight after the Treasury unveiled new proposals to ensure remote gambling operators with UK customers will pay gambling taxes from next year. Shares were down 4.6p to 422p.
The biggest risers on the FTSE 100 were Persimmon, up 91p to 1188p, Randgold Resources up 260p to 5150p, Fresnillo climbing 47p to 1172p and Anglo American up 52p to 1547.5p.
The biggest fallers were BAE Systems, down 5.1p to 437.4p, Babcock International off 13p at 1142p, William Hill down 4.6p to 422p and Wood Group down 9p to 883p.