The FTSE 100 has ended the day up 30.9 points, or 0.5%, to 6,220.3, as private equity speculation over Whitbread offset losses by Friends Provident.
Brewer Whitbread posted the biggest gains with a rise of 11.09% to £19.34, following rumours of bid pitched at 2,300p per share, while Intercontinental Hotels advanced 3.43% to £12.67.
Financials also performed well with Barclays up 3.69% to 702p, following confirmation of its talks with Dutch firm ABN, while Prudential advanced 3.32% to 731.5p, and ICAP climbed 5.98% to 522.5p.
However Friends Provident ended the day as the biggest loser with a fall of 5.94% to 190p, following its results news, while Morrison dropped 2.14% to 308p, Wolseley slipped 1.77% to 312.21, DSG International declined 1.61% to 171.3p, and Imperial Tobacco dropped 1.53% to £22.50.
In the US the Dow Jones Industrial Average is up 51.03 points, or 0.42%, to 12,277.2, following positive housing data from the government.
Heavy equipment maker Caterpillar is posting the biggest gains with a rise of 1.5% to $65.13, closely followed by Wal-Mart which is up 1.31% to $47.20, while AT&T has advanced 1.04% to $37.97.
Microsoft has also climbed 0.86% to $28.08, while Johnson & Johnson has added 0.86% to $61.25, although gains are being limited by Verizon Communications which is down 0.08% to $36.72.
However Honeywell International is the biggest loser with a fall of 0.36% to $47.04, closely followed by Hewlett-Packard which is down 0.15% to $40.15, while Intel has dropped 0.1% to $19.09.
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