Britain's top shares ended a tough week on a bright note, spearheaded by Rio Tinto and other miners on the prospect they could secure strong price rises for metals and by broadcaster ITV as optimism for an advertising rebound coupled with persistent bid speculation. ITV jumped 3.1 percent to take its two-day rise to 7 percent, fuelled by talk that US venture capital group Kohlberg Kravis Roberts may be considering a bid.
Dealers said estimates that ITV has attracted better-than-expected advertising at the start of the year added further support to the rise, which was backed up by hefty volume of over 100 million shares.
The FTSE 100 share index closed up 20.5 points, or 0.4 percent, at 4,820.8, rebounding from an early dip to 4,786 as US shares made a robust opening after positive economic data.
The FTSE still ended down 0.7 percent over the week, hampered by a mixed start to the US quarterly reporting season and concern that high oil prices and weakness in the US dollar could shackle economic growth this year, highlighting an uncertain mood among investors.
"The economic and corporate background is reasonable rather than good. There's still a bit of uncertainty on interest rates and a bit of a slowdown on growth prospects and corporate earnings, but earnings will still rise and we're comfortable with ratings," said John Smith, chief investment officer at Solus Fund Managers.
Rio Tinto shares added 2.3 percent after a report said it had asked Nippon Steel to pay 50 percent more for iron ore from April, reinforcing confidence that prices will rise even further this year as supplies are tight and Chinese demand remains robust.
Miners were also helped by Deutsche Bank, which raised its price targets on several stocks in the sector, including BHP Billiton and Xstrata, whose shares added 3.7 percent and 1.8 percent, respectively.
Volume on all stocks was near 4 billion shares, swelled again by over 700 million shares trading in leisure firm MyTravel as its debt-for-equity swap proceeded.
Trading in Aggregate Industries was hefty for a third day, as dealers said Swiss cement firm Holcim bought over 100 million shares to lift its stake in the firm to near the 14.7 percent stake it wanted to build up. Holcim is considering a 1.8-billion-pound offer for the UK firm.
Bid speculation also lifted Liberty International shares 2.7 percent, after the Daily Mail said overseas firms were eyeing a possible take-over. But a Liberty spokesman said its chairman Donald Gordon, whose family controls 22 percent of the company, was not a seller.
Oil stocks were helped as crude prices held steady at six-week highs amid concern that a looming US cold snap will test low fuel supplies. BP rose 0.6 percent as it was also helped by news its Russian venture TNK-BP launched a plan to streamline its sprawling structure.
The prospect of high fuel costs failed to shake British Airways, however, which added 2.2 percent to 252-1/2 pence as UBS lifted its price target on BA shares to 330p from 300p, maintaining its "buy" stance.
But Cable & Wireless shed 2.6 percent, tracking a fall by its US peers after some negative analyst comments, and software firm Sage lost 2.4 percent as weaker-than-expected earnings from US tech bellwether Sun Microsystems cast a shadow over the sector.
Banks missed out on the rise and fell for a second day, under pressure from concern they face a tougher environment in 2005, with an expected slowdown in the housing market and consumer spending potentially negative.
Royal Bank of Scotland dipped 0.5 percent as it continued to be dogged by talk Spain's Santander Central Hispano may sell its 2.5 percent stake in RBS, while Northern Rock and HBOS both lost about 1.5 percent.