Britain's FTSE 100 index retreated from early highs on Wednesday but still closed up slightly, after falling oil prices hindered oil stocks but helped British Airways, and a flurry of company news lent support.
The FTSE 250 mid-cap index breached a record high, led by property services firm Savills and wireless technology company CSR.
"The resilience that global markets have shown over the last week or so is quite encouraging and it seems interest rate expectations have come down a bit everywhere which is helping equities," AXA Investment Managers Strategist Christopher Iggo said. "The corporate sector is in pretty good shape - we are still overweight equities."
The FTSE 100 index closed 6.7 points, or 0.13 percent higher, at 5,365.9 - its highest close since August 10. The index had earlier traded within 10 points of four-year highs of 5,386.4 set on that date. The FTSE mid-cap index rose 0.7 percent to hit a new high of 7,850.3.
Oil and gas shares weighed on the FTSE, costing about 8 points, after crude prices held below $66 a barrel, more than $4 off record highs set in the wake of Hurricane Katrina's destructive journey across the US Gulf Coast last week.
Higher fuel prices had boosted heavyweight oil stocks and the FTSE this week, but analysts said the outlook for UK equities remained positive despite crude dipping.
Cheaper oil aided British Airways, which advanced 3.4 percent. William Hill, Hays and Enterprise Inns also gained more than 3 percent each, adding to underlying bullish sentiment, analysts said.
"There is a clear theme to the big movers today," Investec Securities Strategist Roger Cursley said. "They are fairly economically sensitive stocks. We are seeing investors take a more optimistic view of the outlook despite the oil price."
Falling crude prices knocked oil major Royal Dutch Shell by 1.5 percent, gas producer BG shed 1.1 percent and mid-cap Venture Production lost 3.7 percent.
Nonetheless, AXA's Iggo said the outlook for the sector was bullish.
"That sector is going to be generating a lot of cash for some months to come which is going to support their own share prices - that is going to be beneficial for the market," Iggo said.
Utilities also fell, broadly retracing Tuesday's gains triggered by bid speculation in the sector.
Company news lent support to the market with pharmaceutical firm AstraZeneca adding almost 3 points to the FTSE 100 and rising 1.7 percent after researchers found its experimental blood-thinner outperformed the current standard treatment Plavix in an early clinical trial.
GlaxoSmithKline also boosted the FTSE 100, advancing 1 percent. It said it had agreed to buy Canada's ID Biomedical Corp to boost its presence in flu vaccines.
Leading the mid-cap charge was property services firm Savills which jumped 16 percent after posting a 15 percent rise in first-half pretax profit. It also said demand for million-pound homes has picked up in recent weeks, adding to hopes that last month's interest rate cut is reviving the UK's ailing housing market.
Shares in BAE, Europe's biggest defence company, gained 1.1 percent after it posted a 20 percent rise in first-half operating profit after strong results from Airbus and UK projects, including the Eurofighter Typhoon combat jet.
Betting shop chain William Hill also stood out with a 3.2 percent gain, recouping its 1.2 percent fall from Tuesday's session, sparked by the 33 percent selloff in PartyGaming after the online casino's outlook raised concerns about growth in the sector.
PartyGaming steadied on Wednesday, and its market capitalisation of 4.2 billion pounds after the slide means it is still on course to enter the FTSE 100 at a quarterly index reshuffle after Wednesday's close. Inclusion in the index makes it attractive to tracker funds which need to maintain weightings of leading UK shares.
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