British blue chips closed at a six-month high on Friday, buzzing after bid talk boosted technology and property stocks and Wall St charged higher.
Anglo-US fund manager Amvescap was the top blue-chip performer, followed by Imperial Chemicals Industries due to their heavy exposure to the US market. Amvescap gained 7.4 per
cent to £4.25 and ICI 6.1 per cent.
The leading FTSE 100 share index finished 46.5 points, or 1.1 per cent, up at 4150.8, its highest close since December 2. The index gained 2.5 per cent last week and has recovered 26 per cent from March's eight-year low.
Although the market came off its peak for the day of 4178 and has still to tackle resistance at 4200, dealers said the underlying tone remained buoyant.
"The market is quite ahead of the fundamentals," said Nigel Cobby, managing director of European equities JP Morgan.
"It will catch up but it won't happen in the next week. We do need some consolidation."
British tech stocks burst higher as investors pinned their hopes on consolidation in the sector after Oracle Corp, the world's No 2 software maker, offered to buy rival PeopleSoft for US$5.1 billion ($8.8 billion) in cash.
British accounting software firm Sage rose 5.8 per cent, while mid-cap software firm Autonomy and Anglo-Dutch computer services firm LogicaCMG jumped 11 per cent as dealers bet on more deals.
British Land leaped to a nine-month peak after Canary Wharf, the developer of London's docklands, rocketed 46 per cent when it said it had received several bid approaches.
Shares in Reuters Group jumped to a four-month high, boosted by hopes for a recovery in demand from its major clients in the investment industry, dealers said.
Market heavyweights GlaxoSmithKline and AstraZeneca lent support to the overall rally.
Banks were responsible for 15 points of the FTSE's rise, with Abbey National up 5.5 per cent at £5.37.
But cellphone operator mmO2 bucked the trend, falling 5.2 per cent on news that rival 3 UK will cut call prices sharply.
Budget airline easyJet was a standout among mid-caps, surging 23 per cent.
* Rolls-Royce and insurer Royal & SunAlliance are poised to win back their places in the FTSE 100 at next week's reshuffle.
The two companies are on course to replace pub chain Mitchells & Butlers and services firm Hays, although other blue chips could drop out of the index if their shares fall before tomorrow's close, when the reshuffle is calculated.
