financial instability receded and the market's recovery gathered pace, a Reuters poll showed on Thursday. But while broadly expecting the stock market recovery to continue, they cautioned that a risk of setbacks remains, with many of the world's economic problems still not fully resolved. "Our view remains that however well the economic rebound proceeds, this recovery will still lack the strength seen in other rebounds," Percival Stanion, Chairman of the Strategic Policy Group at Baring Asset Management, said in a note. "Deleveraging will continue; deficits will be reduced; households will tighten their belts. The journey will still be long, but one that is getting shorter with every step," he said.
Investors greeted BSkyB's offer to show its popular sports channels online for a daily fee with enthusiasm, pushing the shares up 1.0 percent. The company is seeking new customers to offset slowing growth at its core pay-TV service given sluggish consumer spending.
Diageo was a top riser, up 1.3 percent after the world's biggest spirits group ended talks to buy a stake in top-selling tequila brand Jose Cuervo.
Mixed macroeconomic data did little to imbue investors with the confidence needed to plough fresh money into markets already at multi-year highs.
Weak U.S. GDP data and downbeat comments from the Federal Reserve overnight were followed by jobless claims on Thursday, which pointed to a slow healing of the U.S. labour market.
Incomes in the world's biggest economy, however, rose in December by the most in eight years while U.S. Midwest business activity picked up to a nine-month high.
"Investors now seem likely to sit on the sidelines hoping to glean clues from tomorrow's non-farm payroll data," a London-based trader said.
U.S. employers are expected to have added 160,000 jobs to their payrolls in January after an increase of 155,000 in December. The unemployment rate is seen holding steady at 7.8 percent.