Britain's FTSE 100 index closed higher on Friday as banking stocks rallied on the prospect of a wave of consolidation in the sector, while miners also supported the market. Lloyds was up 0.5 percent, and Barclays rose 0.8 percent on renewed market speculation that Bank of America might make a bid.
The FTSE blue chip index ended up 9.5 points or 0.2 percent at 5,878.6 but below the intra-day high of 5,893.6 and slightly lower for the week. Volumes fell to about 1 billion shares from 1.2 billion shares in the previous session.
"We're are looking at pretty low volumes for the session. I think it's the time of the year - the seasonal factor. We're seeing relatively quiet trading ahead of the extended weekend break," said Alex Scott, an analyst at Seven Investment Management. UK markets are closed on Monday.
"I imagine volumes will pick up as the week goes on, with decision-makers back at their desks and investors ready to make more meaningful calls," he added.
Mining shares were also higher after copper prices rebounded from Thursday's 2.4 percent loss. Xstrata finished on top of the FTSE 100 leaderboard, up 2.8 percent.
BHP Billiton, Rio Tinto and Anglo American all gained, with BHP up 1.1 percent after production of copper cathode at its strike-hit Escondida mine in Chile restarted at 10 percent of capacity.
Strategists said UK stocks were supported by strong earnings results and attractive valuations. The FTSE index is down about 4 percent from a five-year high in late April but still up nearly 5 percent so far this year.
"Investors have been pleased with trading results," said David Harbage, investment director at Barclays Stockbrokers. "It helps to underpin the valuation arguments in particular. The fundamental outlook is not particularly exciting, but neither is it perilous either."
"In the very short term, we are likely to continue to see this sideways trading. But looking out on say a six-months view, I would expect investors encouraged by, in particular, the continued strong corporate news, further buybacks as well as significant dividend increases."
CONSOLIDATION IN BANKS British oil stocks including BP and Royal Dutch Shell however ended slightly lower.
"We've seen the pick-up in the oil price. Not to the sorts of levels that we've seen three weeks ago, but that's a useful reminder for investors that we're heading into the hurricane season, and there is the risk of disruption again, so that's got to be closely watched," said Seven Investment Management's Scott.
Vodafone rose 1.3 percent after Belgium's Belgacom said it would take full control of mobile operator Proximus, agreeing to buy Vodafone's 25 percent stake for 2 billion euros. Vodafone said it will use the proceeds from what it said was an attractively priced deal to reduce debt.
Among other gainers, steelmaker Corus jumped 1.5 percent on renewed speculation of a take-over approach for the company. On the downside, Rexam lost 2 percent, paring a 7.5 percent jump in the previous session, which came after the drink cans maker gave a bullish outlook, traders said. Citigroup lowered its recommendation on the company to "hold" from "buy".
Midcap gainers included fund manager Henderson Group , up 11.2 percent after posting solid first-half profits and pointing to promising trends in business performance, while engineering firm Cobham was up 4.7 percent on vague bid talk surrounding the company, traders said.
Shares in building and maintenance firm Interserve dropped 5 percent, however, after it said it was postponing an announcement of its half-year results following a review of accounting mis-statements in its Industrial Services division.
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