Britain's FTSE 100 index closed firmer on Thursday, with home improvements retailer Kingfisher one of the biggest gainers, up 3.3 percent after it beat forecasts with an 18 percent surge in first half profits.
Anglo-US fund manager Amvescap was another bright spot, up 3.8 percent, buoyed by renewed take-over talk after it agreed a settlement with US regulators earlier this month over improper trading activities and cut its dividend on Wednesday. Some investors were encouraged by comments also on Wednesday that it would return to a progressive dividend policy from 2005 onwards.
The blue-chip UK index closed 8.1 points higher at 4,556.5, supported by a strong Wall Street in afternoon business. The FTSE earlier threatened to erase gains after news of booming UK retail sales pointed the way to another UK interest rate hike.
"It certainly raises the possibility of further interest rate rises. The market perhaps might have got too complacent on the rate outlook but any pick-up in rate expectations will be combined with a pick-up in growth expectations," said Robert Parkes, UK Equities Strategist at HSBC Securities.
"We think the outlook is looking much better. The key risk would be more aggressive interest rate rises than the market currently expects. But there's still downside support in terms of valuations and the earnings fundamentals," he added.
Building materials firm Hanson climbed 1.7 percent after US plans for an asbestos compensation fund reassured investors.
Traders said the plans, advanced in the US Senate on Wednesday would, if implemented, remove a major element of doubt from around Hanson, which said in July it had 132,400 outstanding claimants in legal cases related to asbestos.
Household products firm Reckitt Benckiser dipped 3 percent as dealers said an end to its share buyback programme had undermined support for the stock.
Reckitt said it had bought back its target of about 250 million pounds of shares in the current annual cycle, which ends this month. The company enters its pre-results closed period this weekend, when it is unable to continue the programme.
Among the midcaps Colt Telecom jumped 6.6 percent as the company moved to redeem convertible notes early, signalling confidence in its own financial stability.
Computer services company Xansa added 5.3 percent after it said trading for the year to date was in line with expectations.
Anglo-Dutch steelmaker Corus bounced up 6.1 percent after announcing the first profit in its 5-year history for the first half of the year and giving a positive outlook, which highlighted strong demand and higher steel prices.
Traders reported that investment bank CSFB placed 100 million shares in Corus at 50.65 pence each. Corus confirmed that CSFB had placed the block of shares representing just over 2 percent in the firm. CSFB gave no immediate comment.
Looking to Friday, traders said that business was likely to be tentative during the morning as the London market's FTSE 100 futures and options expiries approached.
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