Britain's top shares bounced back from a two-day fall on Thursday, with telecoms, media and financial stocks buoyed by optimism that an improving economy would fatten up profits and revive corporate spending.
A widely expected decision by the Bank of England not to raise UK interest rates had little effect on the FTSE-100, which ended up 21.2 points, or 0.5 percent, at 4,494.2.
The FTSE rose as far as 4,520.1, just three points short of its highest level since July 2002, but lost momentum after a muted start on Wall Street and in the wake of December's heady gains.
"The Christmas rally was built on pretty low volume so we'd be quite happy to see it consolidate around 4,500 and give us a chance to separate the wheat from the chaff and see where the value exists," said Stephen Ford, investment manager at private client stockbroker Brewin Dolphin.
"It looks pretty well supported, there's a lot of cash out there but the market does have a feeling of being a little bit frothy and a little overbought," he added.
Telecoms shares were boosted when the world's biggest mobile phone maker Nokia said it would beat fourth-quarter sales and profits guidance. Vodafone added 1.6 percent.
Evidence that big phone companies are spending money to upgrade their technology after years of limited investment gave an extra lift to telecoms equipment and services suppliers.
Cable & Wireless rose 1.5 percent, Marconi gained 6.2 percent and Spirent soared 14.2 percent, as dealers said its joint house broker Cazenove upgraded the stock.
Anglo-US fund firm Amvescap topped the FTSE with a 6.5 percent rally, benefiting from mounting optimism that fourth-quarter results from US firms - which kick off on Thursday with aluminium giant Alcoa - would show the improving economy is feeding through to bottom-line profits.
The upbeat mood also helped lift shares in news and information provider Reuters Group.
Reuters added 4.4 percent ahead of a trading update on January 15, which dealers and analysts said was expected to confirm signs of a pickup in business for its key financial sector customers.
Mid-cap music company EMI jumped 6.7 percent to its highest level for over a year to extend this week's rally to 20 percent, on signs of improvement for the music industry and lingering talk it could be a bid target.
EMI missed out on a merger with Time Warner last year, which dealers said made it vulnerable to a bid as the industry consolidates. EMI declined to comment.
But the threat that the weak dollar would eat into reported earnings continued to hang over many stocks.
Jewellery retailer Signet fell 3.6 percent after it said the dollar would take about seven percent off its full-year profits.
Plumbing equipment firm Wolseley and building supplier Hanson were among the weakest blue chip stocks, both slipping more than one percent after US homebuilder Ryland said new home orders fell in the fourth quarter.