The main index added 0.5 percent and midcaps edged up 0.1 percent, both indexes holding on to their one-month highs.
European and Asian markets suffered an initial fall when the world's two largest economies failed to give concrete details of efforts to end their trade war, and on growing concerns of political instability in the United States.
President Donald Trump stormed out of talks with Democratic congressional leaders on Wednesday over funding for a border wall with Mexico and reopening the government.
However, on Thursday Trump said there was "tremendous success" with China on trade, helping calm some nerves on the trade war front, while positive jobless claims data also helped ease worries over the economy's health.
Ken Odeluga, City Index analyst, attributed Thursday's seesaw in UK indexes to "very orderly" profit taking, adding that it was not surprising that "sufficient number of buyers turned up to manage to swing things around later in the day".
Amid growing uncertainty around Brexit, British Prime Minister suffered a further blow late on Wednesday when parliament demanded her government come up with a "Plan B" within days if she loses a vote next Tuesday on her divorce deal, as the March 29 exit date ticks closer.
Business minister Greg Clark said a no-deal Brexit would be a disaster and partners such as Japan need assurance that it will be avoided.
“A rejection of the withdrawal agreement wouldn’t come as a shock to the markets... If the withdrawal agreement passes, UK domestic equities and GBP could rally in tandem, as both are under-owned,” Emmanuel Cau, head of European equity strategy at Barclays, said.
Adding to signs of an economic slowdown ahead of the deadline, data from the British Retail Consortium (BRC) showed retailers failed to increase their Christmas sales for the first time since the depths of the financial crisis a decade ago.
Tesco, Britain's biggest retailer, bucked the trend with a 2.2 percent rise in its share price after higher UK like-for-like sales over Christmas. Jefferies analysts said the trading update confirmed Tesco as the "clear 2018 UK Christmas winner".
Otherwise, the largely downbeat trading updates from high street staples - Marks & Spencer, Debenhams and Halfords - deepened the gloom across the retail sector as shoppers reined in spending.
The retailers' index <.FTNMX5370> snapped a six-day winning streak.
Halfords, a cycling and car parts chain on the midcap index, slumped 22.2 percent to its lowest in more than six years, while Card Factory plunged 13.7 percent to a life low, after their trading updates disappointed investors.
Small-cap department store group Debenhams slid 14.7 percent after saying it was looking for fresh funding as the 241-year-old group battles to survive.
Boosting the main index were banks <.FTNMX8350> and energy <.FTNMX0530> shares, which hit their highest levels in roughly a month.
Burberry was the biggest FTSE 100 faller, another victim of concerns about China's slowing economy as the trade row rumbles on. A Berenberg downgrade also weighed.
Mid-cap pub operator Mitchells & Butlers rose 7.7 percent after reporting higher comparable sales for the three-week holiday season.
GRAPHIC: FTSE 10D RSI - https://tmsnrt.rs/2AEhmvr
(Reporting by Muvija M and Shashwat Awasthi in Bengaluru; editing by Josephine Mason/Kevin Liffey/Susan Fenton)
By Muvija M and Shashwat Awasthi