Leading UK shares closed firmer on Wednesday, led by strong insurers and oil stocks, which balanced out ex-dividend and results-inspired weakness in the banks, with Barclays and HBOS both falling.
Britain's biggest insurer Aviva was top FTSE gainer, up 3.4 percent on strong profit growth, which met expectations, along with news of a robust outlook and dividend increase. Elsewhere in the sector Royal & Sun Alliance rose 2.2 percent, while Legal & General added two percent.
Banks, however, saw Barclays slip two percent or 10-1/4 pence, trading for the first time stripped of its latest 13.5p dividend, for which new buyers no longer qualify. Standard Chartered was also ex-dividend, down 1.6 percent.
A rise in US shares fanned a late advance in the UK market and the FTSE-100 index closed up 10.7 points at 4,507.5, gaining back part of Tuesday's 28-point fall.
Traders said a firming in the US dollar after comments from US Federal Reserve Chairman Alan Greenspan had added to the afternoon rebound in the FTSE. A firmer dollar benefits a broad range of FTSE shares which have US earnings.
Michael O'Sullivan, strategist at investment research house State Street Global Markets, said the FTSE could yet have the steam to carry on higher after last week's 100-point advance.
"I think the stage we're at is that the market is probably close to fair value but when you get a broad economic and market recovery the market tends to be pushed by momentum beyond fair value," said O'Sullivan.
"Even though we're close to fair value I don't see the market correcting significantly in the next few weeks...and the pound is beginning to cool off against the dollar, which will help things a little bit," he added.
Oils lent weight to the FTSE advance with BP up 0.8 percent and Shell up 0.4 percent, boosted by gains in oil after US data showing tighter stocks of gasoline.
Mortgage lender HBOS was left out of the day's advance, losing one percent despite higher 2003 results, as investors worried about lending profitability and exposure to personal loans as UK consumer debt burgeons.
Tobacco shares were in demand with BAT up 1.9 percent after it reported a four-percent rise in 2003 earnings on Tuesday and signalled further growth this year.
A number of investment banks raised their BAT share price targets in the wake of the results, including Merrill Lynch and Deutsche Bank, prompting demand in the sector. Other tobacco shares to gain included Imperial Tobacco and Gallaher, both up more than two percent.
Shares in Carnival Corp, the world's biggest cruise operator, raced up the leader-board late in the day to close 2.5 percent higher after the firm reported a strong rise in bookings during its key selling period, and raised earnings guidance.
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