Shares were lower at close of trade, but off early lows after Chancellor of the Exchequer Gordon Brown's surprise forecast of a £1.5bn debt repayment in 1998/99.

This compares with a £2.5bng deficit expected in March.

Traders said sentiment at the close was also helped by Wall Street's opening resilience, despite fears that the Dow Jones would open 40 to 50 points off.

The FTSE 100 index finished 21.6 points lower at 5503.9 after being almost 50 points lower in early trade.

The FTSE 250 was 23.9 up at 4911.7, and the Small-Cap 13 higher at 2048.0.

Early weakness was attributed to weakness in the retail sector, where sentiment was hit by a profits warning from Marks & Spencer.

The firm reported interim results below market estimates and warned on the full year.

M&S fell 45 to 404, Debenhams 13 to 378 1/2, Great Universal Stores 13 to 680, Storehouse 5 to 170, and Next 22 to 493.

BP closed 10 1/2 higher at 905 1/2 in the wake of third-quarter results.

These were sharply lower but just ahead of analysts' expectations, dealers said.

Analysts were divided over Thames Water and Anglian Water after their half-yearly results.

Anglian closed 15 off at 842 and Thames 3 better at 1124.

Securicor made headway, climbing 10 to 475 after CSFB advised clients to 'buy' and set a target price of 540p on the stock.