The reality of automatic spending cuts and tax rises in less than a week hit home with markets today after figures showed a slump in US consumer confidence.
As President Barack Obama cut short his Christmas holiday to resume talks with Republican leaders on how to avoid the fiscal cliff, the latest economic data highlighted the likely implications of their failure to do a deal by January 1.
The US measure of consumer confidence fell for the second straight month, causing the FTSE 100 Index to close just 0.1 points higher at 5,954.3.
Miners dominated the risers board during a session of slim trading volumes. They have endured a tough time this year, falling sharply on fears of a slowing Chinese economy, but those on the front foot yesterday included Eurasian Natural Resources with a rise of 10.2p to 289.4p.
Mining stocks were joined on the risers board by banks, with Royal Bank of Scotland ahead 8p to 325p and Lloyds Banking Group up by a penny to 49.1p, having surged by around 80% over the course of this year.
Household goods firms were most under pressure in the top flight, with Unilever and Reckitt Benckiser down 25p to £23.95 and 51p to £38.95 respectively.
The biggest FTSE 100 Index risers also included Anglo American up 40p to £19.21.
Among the biggest FTSE 100 fallers were Shire off 22p at £18.96, Severn Trent down 18p at £15.96 and BAE Systems off 3.8p at 343.3p.
Carrie Keenan, of investment manager and financial planning specialist Brewin Dolphin in Aberdeen, noted that Xcite Energy finished the day 4.61% higher at 89.875p, while Optos added 3.13% at 174.125p.
The faller’s board included Aberdeen Asset Management, which lost 1.06% at 365.7p, and BG Group, which weakened 0.74% to 1,007.5p.