Provident jumped 20.8% to its highest in five months despite suspending dividend payments, with analysts saying the doorstep lender's first-half loss and bad loan provisions were less than feared.

The domestically-focussed FTSE 250 was up 0.9% after sliding in the previous session following an unexpected fall in domestic retail sales.

The export-laden FTSE 100 closed up just 0.1%, struggling to build on a strong start to the week as more signs of a sluggish economic rebound overshadowed optimism around COVID-19 vaccines and U.S.-China trade.

UK equity benchmarks have lagged the recovery in their European and U.S. peers since April and are still down about 20% on the year. That compares with a 6.6% rise for the S&P 500 powered by historic stimulus and a rally in technology stocks.

All eyes are now on U.S. Federal Reserve Chair Jerome Powell's address at the virtual Jackson Hole Symposium on Thursday, where he is expected to provide an update on the U.S. central bank's future monetary policy approach.

"The market is eager for guidance on how the Fed might push inflation higher and what that means for monetary policy going forward," said Russ Mould, investment director at AJ Bell.

Investors also waited for Bank of England chief Andrew Bailey's own address at the meeting on Friday.

On a thin day for company news, Carnival Corp extended losses, falling 0.9%, after Princess Cruises said it would cancel early 2021 cruises on two ships, citing travel, border and port restrictions due to the pandemic.

Real estate and retail stocks were the biggest sector gainers.

By Sagarika Jaisinghani and Shreyashi Sanyal