Britain's top shares nudged to another four-month high on Tuesday as strong telecoms stocks and a bright return to action on Wall Street helped counter the impact of weak drugs and mining stocks.
Drugs stocks were led lower by GlaxoSmithKline, down 1.3 percent after investment bank Dresdner Kleinwort Wasserstein cut its rating on the stock to "hold" from "add" due to the threat of competition to its asthma drug Advair.
But the FTSE-100 share index eked out its 12th rise in the last 13 sessions, closing 1.8 points higher at 4,565.6.
The FTSE hit 4,572, its highest level since May, after US shares opened higher, and spent most of the afternoon hovering near unchanged. Volume was a moderate 2.2 billion shares.
"It's had quite a long, good run and it's run out of steam a little bit, but I remain optimistic," said Stuart Fraser, investment director at stockbroker Brewin Dolphin.
"When the market was down at under 4,300 people woke up to the fact that it was cheaply valued, which it still is. It just needs the confidence to break through after failing to do that a few times this year."
Drugs took about six points off the FTSE's value, while miners retreated after China's central bank told Reuters on Monday it was considering further measures to rein in growth.
Rio Tinto, BHP Billiton and Anglo American all lost about two percent as Chinese demand has fuelled this year's strong demand for base metals and there are fears its growth could cool.
But telecoms stocks pushed higher, boosted by the improved overall mood, strong cash-flow and good demand for a placing by France Telecom last week. Cable & Wireless jumped 4.1 percent and Vodafone and mmO2 each rose over one percent.
Mid-cap alternative telecoms provider Thus raced 10 percent higher on talk it could be a take-over target and a contract win to provide a network for Chrysalis Radio.
Mid-cap retailer Matalan was also boosted by take-over speculation, as talk gathered pace that US retail giant Wal-Mart was considering a bid. Matalan, up 5.5 percent, declined to comment.
Enterprise Inns added 3.5 percent after its rival Punch Taverns said sales growth had accelerated over the spring and summer. Punch shares firmed 2.7 percent.
The rally was a timely boost for Enterprise and ensured it will keep its slot in the FTSE 100 when index compiler FTSE bases its latest reshuffle on Tuesday's closing prices.
Scottish oil explorer Cairn Energy is set to be the only new entrant in the FTSE. Its shares lost 1.6 percent after a lack of positive drilling surprises in its interim results, but the shares have more than trebled this year, and Cairn should replace bank Bradford & Bingley, down 0.2 percent. A FTSE committee needs to approve the change on Wednesday.