Fresh tensions in Ukraine took their toll on Britain's top shares on Thursday, wiping out much of the day's gains, although expectations of deal-making in the healthcare sector kept the market buoyant.
The FTSE 100 was up 15.69 points or 0.2 percent at 6,690.43 points as of 1612 BST, having hit a six-week high of 6,724 earlier in the session.
Darkening the mood, Russian Defence Minister Sergei Shoigu was quoted by the Interfax news agency as saying that Russia had started military drills near the Ukrainian border in response to operations by Ukrainian forces against pro-Russian separatists and NATO exercises in eastern Europe.
The news prompted investors to lock in profits on a rally which earlier in the session saw the FTSE 100 break through the top of the range in which it has traded in the last few weeks, where the peak was 6,706 points.
"We are obviously still looking at an uptrend for the FTSE, but until we get a daily close through that key resistance metric, then you are probably going to see a sideways to downside bias," IG chief market strategist Brenda Kelly said.
Smith & Nephew, Europe's largest maker of artificial hips and knees, led the blue-chip gains by rising 3.4 percent after medical device maker Zimmer Holdings Inc said it would buy orthopaedic products company Biomet Inc.
The acquisition - the latest in a burst of deal-making and bids in the healthcare industry aimed at either gaining scale or specializing in certain disease areas - supported a long-held view that Smith & Nephew might itself become a target.
Trading volume in Smith & Nephew was strong, at around four times its 90-day daily average, contrasting with the FTSE 100 on about two thirds.
"The whole healthcare industry is about to go through a massive phase of consolidation; Smith & Nephew has always been a potential target of bid speculation," Joe Rundle, head of trading at ETX Capital, said.
AstraZeneca, meanwhile, climbed 3.1 percent to a record high, extending this week's strong advance on Pfizer's reported interest.
Britain's second-biggest drugmaker made no reference to the Pfizer bid talk in its results statement on Thursday, noting progress with new cancer drugs that might revive its fortunes as it posted a 17 percent fall in core earnings per share.
The cancer drugs are seen as a big draw for the U.S. group.
Analysts at Deutsche Bank said the figures looked consistent with full-year guidance and, to a degree, represented the calm before the storm as comparisons should worsen from the second quarter, adding that much of the focus in AstraZeneca remained on deal making.
Trading volume in AstraZeneca came to about twice its 90-day daily average.
(Editing by Hugh Lawson)
By Tricia Wright