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However, Wall Street weakened, with the Dow Jones Industrial Average losing 21 points to 12207. Confidence was dented by food giant, Kraft, lowering its full-year earnings forecasts in light of rising commodity costs.
Back on this side of the Atlantic, Barclays was amongst the sharpest fallers after Arturo de Frias, banking analyst at Evolution Securities, reiterated his “sell” rating. While he believed that Project Merlin was good news for Barclays, the next obstacle - capital - will be far more difficult to negotiate.
Barclays fell 4.4 to 308.85p.
But on a more positive note, Legal & General advanced 3.8 to 122.6p on the back of a bullish note from Nomura. Analysts suggested that the market was underestimating the potential of the insurer’s asset management operations. While that division accounts for 21pc of earnings at the moment, the broker reckons that could rise to 37pc by 2013.
Amongst the small-caps, Renovo tumbled 50.75 - or 74pc - to 17.75p after announcing that its anti-scarring product, Juvista, had failed a late-stage trial.
"We are extremely surprised and disappointed by the failure of Juvista to meet the Phase III trial primary and secondary endpoints," chief executive Mark Ferguson said.
"The board of Renovo will now consider all options open to it to maximise shareholder value."
11.40am: Retailers fall back as John Lewis posts underwhelming sales growth
Leading the benchmark index into negative territory during morning trading were the retailers, with Next shedding 64p to £19.99. Marks & Spencer and Kingfisher lost 9 to 362.6p and 4.5 to 248.5p respectively.
Weighing on the retailers were underwhelming weekly sales figures from John Lewis. The department store chain said that its 1pc increase in sales was "admittedly not a large one, but in positive territory nonetheless".
Howard Archer of IHS Global Insight said the small rise, following on from modest declines over the previous two weeks, "reinforces concerns that consumers are reining in their spending".
He added:
"The recent softer trend in John Lewis sales reinforces suspicion that consumers will be very cautious in their spending in 2011 in the face of serious headwinds. Higher inflation (fuelled by January's VAT hike) and muted earnings growth is increasingly squeezing purchasing power. Meanwhile, unemployment is high and likely to rise further, other elements of the fiscal squeeze will increasingly bite as the year progresses (for example, employers' national insurance contributions will rise in April), and debt levels are elevated."
John Lewis was responsible for an even heavier fall on the second tier. Ocado plunged 44.4 to 240.6p after the John Lewis pension fund cashed in its 10.4pc stake in the online grocer, raising £152m.
John Lewis transferred a 29pc stake in Ocado to the pension fund in 2008. The fund sold more than half that holding in Ocado's initial public offering in July, and was prevented from selling the rest for six months. Analysts had been expecting the fund to sell the rest of the holding at some point.
Ocado's share price languished below its 180p float price for much of last year, but has recently perked up as short sellers covered their positions and speculation around a possible bid for the company, which delivers Waitrose groceries.
Analysts at Jefferies, who have a "hold" on Ocado, said:
"We do not see any operational significance from today's development. We do note, however, the extent to which Ocado's equity had recently benefited from a favourable supply and demand imbalance. We believe today's placing is likely to address that technical situation."
Ocado was the sharpest faller on the second tier. The FTSE 250 fell 28 points to 11693 and the FTSE 100 shed 19 points to 6000.67.
Asian indices drop back
Hong Kong's Hang Seng index dropped 0.4pc to 22,620.22, a day after closing below 23,000 for the first time this year.
Tom Kaan of Louis Capital Markets said the drop was led by faltering shares in the company that runs the territory's stock exchange, following a flurry of merger discussions between exchanges that didn't include Hong Kong's.
China's Shanghai Composite index was off 0.1pc to 2,815.61. Australia's S&P/ASX 200 let go of the previous day's gains, dropping 0.3pc to 4,898.60.
Indexes in Singapore, Taiwan, Malaysia and Indonesia were also lower. Japan's markets were closed for a public holiday.
Seoul was the only bright spot, with South Korea's benchmark Kospi rising 0.1pc to 2,010.01 after the Bank of Korea left its key interest rate at 2.75pc despite rising inflation.
Market sentiment was glum as anti-government protests in Egypt picked up steam and Wall Street started to sag after a bright week.
"With Egypt looking like it's blowing up again, investor confidence is really not there," said Kaan. "I am worried about the U.S. market after an eight-day winning streak, you may see a correction coming in and that could weigh on Asian markets next week."
Oil prices jumped as Egyptian President Hosni Mubarak clung to power amid growing protests calling for his resignation. The dollar was up against the euro and the yen.
US stocks finished flat Thursday, dragged down by Cisco Systems Inc. and Akamai Technologies Inc. Both issued weak earnings forecasts, raising concerns about business and technology spending.
Cisco, the world's largest networking equipment maker, had a 14pc drop — the largest fall of the 30 stocks that make up the Dow.
The Dow Jones industrial average lost 10 points to 12,229. The S&P 500 rose a point to 1,321. The Nasdaq composite rose 1.4 point to 2,790.
Stocks traded lower much of the day, despite the Labor Department saying that 383,000 people applied for unemployment benefits for the first time last week, the lowest level in nearly three years.
Economists say applications would need to fall to 375,000 or below on a consistent basis before the unemployment rate will decline.
Benchmark crude for March delivery was up 65 cents at $87.38 a barrel in New York. The contract rose 2 cents to settle at $86.73 per barrel on Thursday.
A surge in Portugal's borrowing costs, meanwhile, again inflamed concerns about Europe's debt crisis, leading to a slip in the euro against the dollar.
The European currency slid to $1.3577, after falling to $1.3593 late Thursday. The dollar was also stronger against the Japanese yen, at 83.44 from 83.32 late Thursday.
Friday's Market Report:
Retailers retreat as FTSE rallies on Egypt relief
FTSE today: market report - as it happened February 11, 2011
Thursday's Market Report:
ICAG nosedives on Air France profit warning
FTSE today: market report - as it happened February 10, 2011
Wednesday's Market Report:
LSE-TMX merger prompts global jump in bourse shares
FTSE today: market report - as it happened February 9, 2011
Tuesday's Market Report:
GKN speeds ahead as car sales accelerate
Tools: Shares and Markets: News, charts, data
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