UK stocks finished on an upbeat note on Friday as weak US data eased fears of higher interest rates in the world's biggest economy and as online gamers PartyGaming and 888 charged ahead on talk of sector consolidation.
"The whole sector's felt better. There are all sorts of bid rumours around BetandWin. It's not that PartyGaming's going to get bid for but it does mean people are more encouraged by the sector," said one trader.
PartyGaming was up 9 percent by the close of play and 888 rushed 14 percent higher, showing a change of sentiment from the uncertainty caused last month when the sector was rocked by US charges of racketeering against the former chief executive of BETonSPORTS and seven others.
The industry was further boosted as talk emerged late in the session of a delay to proposed US legislation, which aims to prohibit most types of Internet gambling.
Elsewhere, there was plenty of action in the mining sector. Anglo American notched up a 4.8 percent rise as the world's third-largest miner said it would give an extra $5 billion back to investors and met its first-half earnings forecasts.
By the close, the FTSE 100 was up 51 points at 5,889.4 - taking heart from weaker-than-expected US jobs data, which was interpreted as adding to the case for the Federal Reserve to put interest rates on hold. The move recouped some of Thursday's losses when the index suffered its biggest drop since mid-July following a surprise interest rate hike from the Bank of England.
Market watchers said investors were still taking a relatively cautious stance, however, favouring the biggest stocks over their small and mid-cap peers. In July, the FTSE 100 finished up 1.6 percent while the FTSE 250 ended the month down 0.7 percent.
"There really isn't breadth to the market. It's activity in the large caps and this is what we're seeing today. A good rise for Anglo American on figures, banks recovering on the hopes interest rates might not rise," said John Smith, an investment director at private bank Brown Shipley.
"I think the theme at the moment is stay defensive." Markets around the world have been volatile recently as a broadly positive earnings season has been offset by uncertainty about interest rates and geopolitical tensions.
Airline British Airways was the hardest hit among FTSE 100 players, down 3.5 percent by the close . Europe's third-largest airline said first-quarter earnings rose 20 percent but tipped a tougher second half, with higher-than-expected labour costs and more industry competition.
The carrier also said it had no immediate plans to hike fuel surcharges despite broadly higher oil prices.
Banks and property stocks were on the rebound, however, after being especially hard hit by the BoE's unexpected 25 basis point rise. Mortgage lender Northern Rock added 3.4 percent, followed by fellow bank Barclays and real estate group British Land.
Take-over talk pushed up several stocks, including rumours of bids for pubs group Mitchells & Butlers and insurance broker FTSE 250.
JLT was also helped by higher-than-expected earnings from US peer Willis Group, and traders noted the bid speculation came just days after the company's chief executive said he was not aware of any take-over interest in the company.
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