LONDON The FTSE 100 closed a touch higher on Friday, helped by a robust U.S. jobs report, although weak consumer confidence data from the world's biggest economy and a grim UK economic outlook knocked sentiment.
The top share index closed up 12.98 points, or 0.2 percent, at 5,914.40, having hit a high of 5,923.11 after data showed U.S. non-farm employment increased by a better-than-expected 146,000 jobs last month.
But the market trimmed gains after a separate report showing U.S. consumer confidence plunged in early December to its lowest since August.
"You take the sugar rush from the payrolls data, and then you take the flipside of that with the confidence data... and basically now we're looking at the FOMC next week, and we're back where we were when we started," Michael Hewson, senior analyst at CMC Markets, said.
A meeting next week of the Federal Open Market Committee (FOMC) will be closely watched to see if U.S. policymakers decide to keep pumping money into the economy.
"We're going to try and push higher, but we really need something much more positive and much more conclusive given the newsflow that we've had today," Hewson said.
Gloomy UK economic data dampened the mood, with British industrial production unexpectedly falling in October after factory output posted its biggest drop since June, fuelling fears the economy will shrink again at the end of this year.
Retailers, inextricably linked to the state of the UK economy, were out of favour, with high street stalwart Marks & Spencer the worst off, down 1.1 percent.
Goldman Sachs downgraded its rating for M&S to "sell", with the investment bank deterred by a lack of focus on online operations.
"Given Marks & Spencer's strategy of focusing its investment on a capital-intensive store base over the past six years, rather than investing in capital-light online operations, we believe the company will continue to experience declining returns on investment in the medium term," Goldman analysts said in a UK retail sector review.
As part of the review, Goldman also hiked its rating for Next to "neutral", noting that through high returns of its online business, it has markedly stepped up capital returns to shareholders.
Next slipped 0.2 percent, having hit a new all-time high on Thursday, with its 14-day relative strength index near to 70 in a sign it might be getting overvalued.
The rally of more than 5 percent seen since mid-November on the FTSE 100, fuelled by an easing of worries over the euro zone and hopes for a solution to the U.S. "fiscal cliff", has left the index at the top of a range established since September.
"(The fiscal cliff) is a long drawn out process rather than a quick swift decision. Quick swift decisions tend to see quick swift market reactions on the back of them, whereas something more drawn out like this will have a more diluted reaction," said Alastair McCaig, Market Analyst at IG.
On the upside, housebuilder Berkeley Group was among the top mid cap gainers, rising 4.7 percent to a record peak after the company unveiled a 41 percent rise in pre-tax profit for the six months to end-October and declared its first dividend since 2008.
Richard Curr, head of dealing at Prime Markets said: "(We) believe the scale of the success here will continue to drive the shares higher into Q1 2013, and we expect our initial target of 1,750 pence to be hit in the coming 7-10 days. Buy."
(Reporting by Tricia Wright)