Confirmation of bid talks involving Abbey sent the FTSE higher by 20 points to 4,326.30 by the close, bucking the trend of falling prices across Europe and in US markets this afternoon.
Abbey gained 87p to close at 580p, its highest price since February this year as it confirmed talks with Spain’s biggest bank Banco Santander Central Hispano.
Other banks followed suit as investors bet more takeover deals could boost earnings in the sector.
Alliance & Leicester added 45.5p to 843p, Bradford & Bingley added 7.5p to 267p, and Northern Rock added 10.5p to 711p.
AstraZenica, the drug developer and maker, gained 34p to 2,411p after it got approval to sell a new drug as a treatment for bi-polar disorder.
Reuters, the financial news and data provider, shed 8.5p to 327.25p ahead of results next week.
Tesco dropped 3.75p to 251p after announcing the shift of some 420 jobs offshore to India.
Shares in the US are down again after the government warned of further terrorist attacks and oil prices surged again on fears the bankruptcy of Russian oil producer Yukos could severely cut exports to the world market.
The Dow Jones Industrial Average index is down about 54 points to 9,995, while the broader S&P 500 index is off by about 8 points to 1,089.IFAonline
Achievements, charity work and other happy snippets
Laughable excuses for persisting
Spent 56 years at Schroders
Warns on profits