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LONDON (Reuters) - The top share index was modestly lower on Friday, volatile on the last day of the month, mirroring its November performance as U.S. budget concerns dominated.
The FTSE 100 closed down 3.48 points, or 0.1 percent at 5,866.82, dropping back late on after hitting a 6-week high above the 5,900 level earlier in the session.
Profit-taking in heavyweight mining stocks after recent strong gains was the main factor dragging the UK blue chips lower late on.
"This is the season to be jolly (almost) and markets are likely to continue to climb this ‘wall of worry' for a while yet. But I have to wonder if they will enjoy the view once they reach the top - or decide it really wasn't worth the effort and climb straight back down again," said Mike Ingram, market analyst at BGC Brokers.
The UK blue-chip index still ended 1.5 percent higher for November, notching up a sixth consecutive monthly gain, albeit having swung through a near 200-point range during the month.
Index provider FTSE said the last time the index rose consecutively for 6 months or more, was over the 6 months to November 2005.
The index hit a low of 5,605 on November16 after U.S. election results raised concerns about an impending "fiscal cliff".
This is a combination of U.S. government spending cuts and tax rises due to be implemented under existing law in early 2013 that may tip the economy back into recession.
The FTSE 100 tracked falls on Wall Street on Friday, with U.S. blue chips down 0.2 percent by London's close, awaiting more news on talks to close the budget gap.
On Thursday, the leading Republican politician, House of Representatives Speaker John Boehner, said there had been no substantive progress in talks with the White House, dampening hopes for an early deal less than 24 hours after he had said he was "optimistic" about reaching a pact.
"November has been a funny old month. It had volatility, that sharp move to the downside after the U.S. election. But there are clearly signs for investors that politicians are working hard on the U.S. cliff, and hopefully they will try and prevent any hard landings in the U.S. economy," Angus Campbell, market strategist at Capital Spreads said.
Banks led the advance by UK blue chips after recovering from early falls, with Barclays rallying 0.6 percent higher, supported by a target price hike from UBS.
The broker stayed "neutral" on the sector, however, saying that while tail risk is reducing around the UK banks, with capital positions robust, the recent performance by their stocks leaves upside modest.
Royal Bank of Scotland missed out on the sector gains, with the part-state-owned lender shedding 1.3 percent as the Daily Telegraph reported that it could be forced to explore the sale of core businesses after the Bank of England increased the pressure on lenders to raise new capital.
Separately, the bank said the sale of its Indian retail and commercial banking operations would not proceed.
Among other blue-chip fallers, Kingfisher extended its declines after disappointing Q3 results on Thursday, down 0.4 percent as UBS cut its rating to "neutral" from "buy".
But positive broker comment fuelled gains in testing firm Intertek, up 1.0 percent after Berenberg raised its rating to "buy" from "hold" in a UK support services review.
Outsourcing firms Babcock and Capita were also in demand, ahead 1.2 percent and 0.3 percent respectively, as Berenberg started coverage on both with "buy" ratings.
"Things are still looking quite optimistic and we are expecting a continuation of the trend seen in the past few weeks, leading to a festive rally," Capital Spreads' Campbell said.
Editing by Stephen Nisbet