Britain's FTSE 100 closed at a three-week high this evening, returning to levels before the attacks on the United States, while British Airways dished up more bad news and saw it shares fall.
The UK's leading share index closed at 5,036.0 points, a rise of 19.8 points or 0.4 per cent, its fourth session of gains, in market volume of 2.1 billion. Weaker than expected U.S. jobs numbers took the rally off its earlier highs as Wall Street went into reverse.
John Smith, head of strategy at Brown Shipley Investment Managers, said he was confident of a FTSE 100 rally to 5,400 by the end of the year.
Merger speculation helped lift shares in Celltech 5.2 per cent. Sources in New York familiar with the situation told Reuters that talks between Britain's biggest biotechnology company and the U.S. group Biogen Inc. broke down recently but could resume.
Officials at Celltech and Biogen declined to comment, although senior executives from both companies have made no secret of their desire to build them through acquisitions.
Dealers said strength among heavyweight stocks such as British Telecom BT.L , Vodafone and Glaxo SmithKline reflected a more confident overall tone and outweighed concern that more corporate earnings downgrades are likely in the coming weeks.
FTSE 250 telecoms equipment maker Marconi also surged 24 per cent on hopes it is taking action to improve its cash position. The Wall Street Journal reported private equity firm Duke Street Capital was interested in acquiring Marconi's Gilbarco business, which makes petrol pumps. Marconi declined to comment.
Media stocks also bounced back from this week's depressed levels with United Business Media and Pearson rising over seven per cent each.