British Airways and insurers, such as Prudential led the FTSE 100 higher on Friday to seal the index's third weekly gain, while US jobs data calmed fears the economic revival had faltered.
British Airways which has been whipsawed in recent weeks as oil prices fluctuated, added 3.1 percent after the company reassured investors, saying in its monthly traffic data statement that it still expected revenue for the year to March 2005 to be 2-3 percent higher than last year.
The FTSE-100 index closed up 32.2 points, or 0.7 percent, at 4,550.8, having made gains in the last 10 out of 11 sessions. The index closed at its highest level since May.
The benchmark index, which has risen for the third week in a row, had been trading near par before the release of data that showed the United States added 144,000 new non-farm jobs in August, just shy of expectations for a rise to 150,000. Figures for June and July were revised up.
Concerns that the economic recovery had hit a rough patch, coupled with rising interest rates and surging energy prices had hobbled stocks over the summer.
"We'd got to a classical hiatus: We'd had a profits and economic recovery, so shares had a good rise, but then they just sat there wondering what to do for an encore while the economy pulled through the cost increases and interest rate rises," said Dan Bunting, European strategist at Dryden Wealth Management.
"I always felt that we'd get to the autumn and that things would start to go through the gears."
Elsewhere on the upside drinks firm Allied Domecq rose 2 percent after it said it expects annual earnings to be in line with expectations and its key growth drivers were performing strongly.
Insurers rose, helped by their exposure to improving equity markets and their tendency to outperform the market's rise. Prudential rose 2.5 percent while Legal & General added 2.7 percent.
But news that US tech bellwether Intel cut its revenue and margin forecasts hit stocks with exposure to the semiconductor industry. Gases firm BOC - which supplies high-purity gas, vacuum pumps and other equipment to chipmakers - fell 0.6 percent, while industrial materials company Cookson, which also supplies the semiconductor industry, led mid-caps lower with a 6.8 percent drop.
Chemicals firm ICI was the top blue-chip loser, slipping 0.9 percent after Credit Suisse First Boston cut its stance on the stock to "under-perform" in a bearish note on the sector.
But among mid-caps, shares in utility Northumbrian Water surged 6.3 percent as talk returned that it could be a bid target, with dealers suggesting UK rival Kelda as the most likely predator.
Northumbrian and Kelda both declined to comment.
Shares in engineering company Amec rose 3.3 percent as dealers reported talk that US rivals Bechtel or Fluor were casting an eye over the company. Amec declined to comment, while Bechtel and Fluor could not be reached.
Amec earlier announced that its finance director dealt in the firm's shares. Directors are not allowed to deal in a company's shares when a formal approach has been made.