UK stocks closed higher on Wednesday, bolstered by strong telecoms stocks and by a 5.6 percent surge for ITV after a big cut in the amount the broadcaster has to pay for its television licence. "This should help mitigate recent pressure on earnings from the weak advertising market," analysts at investment bank CSFB said.
Airports operator BAA was next in line on the blue-chip gainers list. It was up 3.9 percent, after UBS upgraded the stock to "buy", saying investors were too gloomy on prospects for the next regulatory review due in 2008.
By the close of play, the FTSE 100 was up 18.7 points, or 0.4 percent, at 5,109.1, putting it on course for a monthly gain of about 3 percent.
Observers said the pace of recent market gains was likely to slow.
"It has had a very good run in a very short period of time so it does need to pause for breath," said Errol Francis, a fund manager with Credit Suisse Asset Management.
Sentiment has also been bolstered by fresh hope of a possible cut in interest rates and oil stocks have added strength to the UK market as they tracked crude prices through $60 a barrel.
BP, BG Group and Shell fell on Wednesday however, as profit-taking and a surprise jump in US crude inventories sent oil down towards $57 a barrel.
"I would still expect a reasonably high price of oil and upgrades to come for (oil) stocks," said Stephen Adams, head of UK equities at Aegon Asset Management.
Telecoms firms were in demand as traders said cheery news from France Telecom, including plans to continue cutting costs and debt, improved sentiment towards the sector generally.
Cable & Wireless, which has often been rumoured as a possible takeover target for France Telecom, rose 3.9 percent and hit its best level since February 2004.
France Telecom last week denied it was planning an offer for C&W.
Mobile operators were also buoyant, with O2, up 2.5 percent as talk it could be a bid target refused to die down, and Vodafone adding 2 percent.
On the downside, a trio of blue chips - BOC, Emap and Man Group - eased as they traded without the right to their latest dividend payout.
In the mid-cap arena, telecoms testing group Spirent jumped 5.4 percent on its plans to cut jobs as it overhauls a key unit.
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