Britain's benchmark share index ended the week on a positive note, as oil stocks and M&A chatter helped European shares score their first five-day winning streak since recent slides in world equities. M&A talk lifted shares in Pearson to a five-year high.
The publishing group rose 4 percent on renewed bid interest after Dutch publisher Wolters Kluwer NV said it was in talks to sell its education arm for more than anticipated.
The FTSE 100 closed on Friday 21.4 points or 0.34 percent higher at 6,339.4, notching up a 3 percent gain on the week. The index's near four-week closing high comes after several tough weeks for stock markets, which were hit earlier this month by global economic concerns that snowballed amid worries over the state of the US subprime mortgage market.
"It's been amazingly strong this week ... It's as though that little correction never happened," said Roger Cursley, UK strategist at Investec.
"There's a lot of relief that the subprime issue seems to have been contained," he added. Leading the FTSE higher, oil giants BP and Shell rose 2.5 and 1 percent respectively, after US crude oil prices hit a three-month high above $62, as renewed tension arose between the Iran and the West after the oil-producing nation seized 15 British navy personnel.
Rising copper prices helped miners, with Kazakhmys gaining 1.3 percent, BHP Billiton adding 1.2 percent and Xstrata up 1.1 percent. European shares extended gains during the session after the pace of US existing home sales rose an unexpected 3.9 percent in February to a 6.69 million-unit annualised rate.
The banking sector also boosted the FTSE, with Barclays, which is in talks on a $80 billion take-over of the biggest Dutch bank, ABN Amro, continuing to rise. The stock ended 2.6 percent higher, while in the same sector Lloyds TSB gained 1.4 percent and Northern Rock added 0.3 percent. Shares in news and information company Reuters added 2.7 percent after a Lehman Brothers upgrade.
In the red, however, mobile phone giant Vodafone lost 1.5 percent as traders cited media reports that it is one of four bidders for Deutsche Telekom's Spanish unit Ya.com. Vodafone declined to comment.
Traders also said the share price was hit by uncertainty over European roaming phone rates and media reports of a possible fresh price war in the UK mobile market after Hutchison Whampoa vowed to plough more money into winning customers for its 3G businesses. Despite a week of upbeat trading for UK equities, traders said investors had not thrown caution to the wind.
"The FTSE has managed to grind out some modest gains through the day, but overall a degree of caution does seem to be prevailing," said Jimmy Yates, a trader at CMC Markets. "With the index having had such a strong run over the last week the prospect of some quick profit taking cannot be ignored," he added.
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