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The FTSE 100 lost most of today's gains in a drop in the final hour of trading.

The index finally closed up a whisker at 4,255.98 – a gain of 6.82 points or 0.16 per cent – although it managed to cross the 4,300 mark in the afternoon.

In New York, at 1:11 EST (18:11 GMT), the Dow Jones was down 0.53 per cent to 8,474.61.

 David Jones, chief market strategist at IG Index, said: “It has been another day of light volumes and little direction in London. 

“GDP data released in the morning showed that the third quarter contraction in the UK economy was worse than first thought, but investors managed to shrug this off with little affect on share prices. US data released in the afternoon showed continued weakness in their housing market but again this has had little impact.”

He added: “On the last full trading day before Christmas, this is more down to traders’ focus being elsewhere, rather than a sudden indifference to ongoing downbeat news for the economy.”

Mr Jones went on to say: “Although stock markets are still well above their November lows, they are also still well below the November highs, reflecting the lack of conviction many still have that the worst has passed. 

“With credit still tight; car manufacturers on the brink and UK mortgage approvals sharply down over the last 12 months, the hangover from the boom years looks set to drag on into 2009.”

Today in London, the biggest gains went to Invensys, rising 5.15 per cent.

Prudential was up 5.05 per cent, RBS rose 4.59 per cent and Aviva climbed 4.17 per cent.

But it was not all plain sailing for the financials, with Legal & General down 6.18 per cent, Standard Life falling 3.76 per cent and Royal and Sun Alliance falling 2.68 per cent.

With a gloomy Christmas on the high street, Marks & Spencer dropped 3.40 per cent and Vodafone was down 3.53 per cent.