Britain's FTSE 100 gained 19 points on Friday, closing the week higher after OPEC boosted oil output to aid economic recovery, but cheaper oil was a mixed blessing for the index as BP and Shell weighed.
UK shares made broad-based gains as crude futures fell after a decision by the Organisation of Petroleum Exporting Countries to pump more oil and as US inventory data showed crude stocks at a two-year high.
"I think some of the bears have had to go back into the closet today," said Brewin Dolphin equity analyst Ian Armstrong.
Boosted by the banking, insurance and telecoms sectors - some of the stocks most vulnerable to fears that high oil prices will stall economic recovery - the FTSE 100 rose 0.43 percent to close at 4,454.4 percent. Last week the index ended at 4,430.7.
Cable & Wireless led with a rise of 2.9 percent, for an overall gain of more than six percent in the week.
Some traders cited rumours of takeover activity among alternative UK fixed-line carriers, while others said C&W extended gains after announcing earlier in the week it had halted a three-year sales decline and restored payment of a dividend.
Britain's largest insurer Aviva was close behind with a 2.8 percent gain.
The index got a boost from a late reversal in GlaxoSmithKline, which rose out of the red to close up 0.2 percent on confidence the UK drugmaker can weather a US lawsuit, which claims it concealed negative information about an antidepressant.
But while the US market rallied as US job data came in a bit ahead of expectations, which underpinned faith in a strengthening US economy, oil stocks muted FTSE moves.
BP fell 0.9 percent, while Shell came off 0.6 percent.
"We see the oil sector as about fair value in an absolute sense, but relatively expensive and likely to underperform after the sharp bounce it has had, particularly with the dollar weakening again," CSFB said in a research note.
"Take profits," it added.
William Morrison fell 0.9 percent after industry data showed that Safeway sales continued to fall after Morrison's takeover, highlighting the challenge Morrison faces in integrating the supermarket chain.
Armstrong of Brewin Dolphin, however, said gains in mid-caps pointed to greater confidence that economic growth can weather higher interest rates.
The FTSE 250 closed up 0.86 percent, or 51.9 points, at 6,096.8.
The top mid-cap gainer was Anglo-Dutch steel maker Corus, which rose 6.3 percent. Traders said an isolated buyer in the stock pushed prices on thin volume and that it got support from Chinese steel industry assertions that output would grow steadily, not spike or fall off.
Traders said speculation about possible management buyouts boosted MFI furniture sellers by 2.1 percent and Big Food Group by 2.6 percent, fuelled by other acquisition activity that materialised in recent days.
Among those were Philip Green's spurned bid to buy High Street stalwart Marks & Spencer, and Icelandic convenience food firm Bakkavor's acquisition of a stake in UK rival Geest.
"M&S was rumoured and it happened, Geest was rumoured and it happened," one trader said. Marks & Spencer shares rose 0.42 percent, while Geest gained 0.9 percent.