The FTSE 100 Index pared gains on Thursday after the Bank of England unexpectedly kept interest rates on hold.
But the bank issued a warning on the potential impact of the UK's decision to leave the EU, reportedly saying it expected "sizeable falls in house prices".
Many analysts had expected a rate cut, but others had forecast a hold, saying the falling pound would provide any monetary easing necessary.
Markets welcomed increased political stability in the UK - or at least a semblance of it - after Prime Minister Theresa May began putting a new government together.
The FTSE 100 Index fell back to stand 25.7 points ahead at 6696.1.
May appointed former Foreign Secretary Philip Hammond as Chancellor, spelling the end of George Osborne's time in Number 11, and Boris Johnson as his replacement at the Foreign Office.
The top blue-chip riser was miner Anglo American PLC (LON:AAL) with a 3.94% advance to 844.2p.
The biggest Footsie faller was Irish construction materials business CRH PLC (LON:CRH), down 1.26% at 2200p.
In the small-cap arena, Anglo Asian Mining Plc (LON:AAZ) boosted production substantially in its second quarter as it continued to cut costs at its Azerbaijan operations. Shares rose 11.6% to 19.25p.
Shares in gold recovery specialist Goldplat Plc (LON:GDP) gleamed 9.3% to 5.88p after it agreed to farm out a majority of its Anumso gold project in Ghana.
But Gulf Keystone Petroleum Ltd (LON:GKP) leaked 41.5% of its value to 2.75p on news that it had done a deal with most of its creditors for a capital restructuring and open offer.
Non-executive director Keith Lough also replaced Andrew Simon as non-executive chairman.
Shares in digital marketing group Digital Globe Services Ltd (LON:DGS) sank 22.2% to 59.5p as it forecast lower-than-expected annual earnings of about US$3.1mln.
Back among bigger stocks, convenience store chain McColl's Retail Group PLC (LON:MCLS) rang up 16.35% to 153p after buying 298 smaller shops from the Co-op for £117mln.
Price comparison site Moneysupermarket PLC (LON :MONY) was 7.7% richer at 291.6p as it forecast "solid" half-year results with revenues expected to rise 10% to £158mln.
Preview at 6.55am
The FTSE 100 is set for what looks like a relatively quiet start ahead of a decision on interest rates by the Bank of England.
It is widely expected the Bank will cut the base rate to 0.25% later today.
The only other question is whether it will then pull the lever on a round of quantitative easing in a bid to stave off recession post-Brexit.
Either way investors are sanguine about the prospect with the spread betting firms predicting a two point fall in the index of blue-chip shares to 6,668.40.
The early reaction to Prime Minister Theresa May’s fledgling cabinet, meanwhile, has been one of guarded positivity.
Overnight, Wall Street made, though they were marginal as US equity markets paused for breath after a roller coaster couple of weeks.
In Asia, the picture is a mixed one with the Nikkei 225 up 0.8%, with the weaker yen driving the export stocks higher. Australia’s ASX advanced 0.2%, with shares in financial companies in demand.
Elsewhere, the markets were flat or marginally lower.
Back here in the UK, it appears to be a reasonably busy day for scheduled corporate news. Updates from Halfords, Moneysupermarket, Hays and Experian are published at 7am alongside financial results from the clothing retailer Super Group.
*Brent crude trading 1.2% higher at US$46.81 a barrel.
*Gold US$3.70 lower at us$1,339.90 per ounce.
*Pound trading at US$1.3196.
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*Royal Dutch Shell is bracing for strike action on seven of its North Sea platforms in the biggest industrial dispute to hit U.K. oilfields for a decade – FT.
*The Bank of England and Treasury have come under fire again for their strong advocacy of remaining in the European Union and have been warned not to “talk down” the economy – Times.
*Dozens of companies are set to submit bids this week for one of the world’s biggest energy storage projects, supplying back-up power for the National Grid – Times.
*The number of people wanting to buy a house has fallen to the lowest level since mid-2008 amid post-referendum uncertainty, according to the Royal Institution of Chartered Surveyors – Telegraph.
*Whitbread is to pull its Premier Inn business out of India and South East Asia in what marks the company’s first major change of strategy under its new boss, Alison Brittain – Telegraph.