London stocks were steady by midday on Wednesday, avoiding a broader selloff triggered by concerns about an AI bubble thanks to its more limited exposure to the tech sector.
The FTSE 100 was flat at 9,719.31.
Russ Mould, investment director at AJ Bell, said: "Certain investors have been worried about high equity valuations, US liquidity constraints, red flags in the US regional banking sector, and incestuous behaviour among mega cap US tech stocks around AI. Various leading figures in the financial world have expressed concern, and Michael Burry of The Big Short fame is betting that certain big name tech stocks will fall. That kind of chatter will always cause investors to shiver.
"Big money has been made on financial markets this year, and there is the potential for some people to decide enough is enough and to lock in profits. Equally, there are also many people who believe there is good reason to stay fully invested as there are tailwinds to take markets even higher. There's the potential for more big swings on the market over the coming weeks and months."
On home shores, a survey showed that the dominant services sector grew by more than expected in October, bolstered by burgeoning domestic demand.
The S&P Global UK services PMI business activity index was 52.3 last month, up on September's 50.8 and comfortably ahead of consensus and the flash reading, both 51.1. A reading below the neutral 50.0 benchmark suggests contraction but one above it indicates growth.
Respondents said they had seen a "gradual" turnaround in new work and sales opportunities during the month, despite ongoing uncertainty among clients. Domestic demand was particularly strong.
Further supporting the sector was an improvement in input price inflation, which now stands at an 11-month low.
Expectations for the next 12 months also notably improved, rising to the highest level since October 2024.
The strong print helped push the PMI composite output index higher, up to 52.2 from 50.1.
The composite index is a weighted average of the S&P Global's manufacturing and services indices.
Tim Moore, economics director at S&P Global Market Intelligence, said the latest survey provided "positive signals" for the UK service economy.
He continued: "The rate of new business expansion gained momentum, with the latest upturn among the strongest see over the past year.
"A number of firms noted resilient customer demand, especially in domestic markets, despite elevated business uncertainty a delayed-decision making on major spending ahead of the Budget."
Matt Swannell, chief economic advisor to the EY Item Club, said the latest PMI survey was "unlikely to move the needle for tomorrow's MPC decision, with the Bank of England expected to leave Bank Rate unchanged as they remain more wary of cutting interest rates too quickly rather than too slowly".
In equity markets, Coca-Cola Europacific was among the top performers on the FTSE 100 as it reiterated its full-year guidance following a "solid" third quarter.
Marks & Spencer reversed earlier losses to trade up after it posted a 55.4% drop in first-half adjusted pre-tax profit as it took a hit from a recent cyber attack. In the 26 weeks to 27 September, adjusted pre-tax profit declined to £184.1m from £413.1m in the same period a year earlier.
The retailer pointed to a £101.6m charge in relation to the incident, with further charges of around £34m expected in the second half of the year, taking total costs to about £136m.
Barratt Redrow gained as the housebuilder called on the government to take action to support demand ahead of the Autumn Budget later this month, following a slight slowdown in trading momentum over the start of the new financial year.
The company said it remains on track to hit its home completions targets this year, but net private reservation rates have eased slightly since the start of July due to challenging conditions and increased uncertainty ahead of the Budget.
Clean energy technology developer Ceres Power surged after it signed a manufacturing licence agreement for the production of its proprietary solid oxide fuel cell technology with Weichai Power, a global original equipment manufacturer and power systems developer headquartered in China.
Online rail ticketing platform Trainline jumped as it lifted earnings and sales targets after reporting a 14% jump in half-year profits. The company, which sells tickets for journeys in the UK and Europe, said it now expects adjusted EBITDA growth of between 10% and 13%, up from original guidance of 6% to 9%. Net ticket sales are forecast to rise by 6% to 9%.
On the downside, Polar Capital Technology Trust and Scottish Mortgage Investment Trust both slumped due to their tech exposure.
Engineering firm Weir Group fell as it reiterated its full-year guidance despite "elevated levels of uncertainty" related to critical metals disputes and further tariffs between the US and China.
JD Wetherspoon and TP Icap also lost ground after trading updates.