(Noon): UK shares surrendered early gains, but the pound soared after a survey indicated a strong rebound in manufacturing activity during August.
Shortly before midday the FTSE 100 was just 5.31 points higher at 6,786.82.
However, on the currency markets, sterling rose 0.8% against the dollar to $1.3247 and was 0.9% higher against the euro at €1.1877.
The rise came after the purchasing managers’ index for manufacturing jumped to a 10-month high.
The compilers of the survey said the weakness of the pound following the Brexit vote had boosted exports, although it had also increased companies’ costs.
On the stock market, shares of housebuilders were in demand, with Taylor Wimpey, Berkeley Group and Persimmon all up by more than 3%.
International recruitment firm Hays fell 2.3% despite reporting an 11% rise in full-year profits to £173m.
The company said the UK job market had weakened “significantly” around the time of the EU referendum, although it was too early to judge the long-term impact.