Britain's leading shares rose slightly on Wednesday, helped by clothing retailer Next ahead of its results and upbeat broker comments on mobile phone giant Vodafone. Plumbing and heating supplier Wolseley added 1.1 percent after analysts at Smith Barney said the outlook was good for its US business.
"This region is supportive for the sector as a source of further potential earnings upgrades and potential acquisition opportunities," the bank said in an upbeat assessment of European building stocks generally.
The FTSE 100 was up 9.4 points to 5,347.4 by the close, recovering only marginally from Tuesday's 37-point fall. Slim gains on Wall Street, where investment bank shares climbed on strong earnings news, also helped keep the UK market in positive territory. The telecoms sector accounted for two-thirds of the gain, while banks were the weakest performers.
Stocks trading without the right to the latest dividend, including Diageo and Scottish & Newcastle, also put pressure on the index.
Market watchers remain broadly positive on UK equities, with strategists at Deutsche predicting the FTSE will rise to 5,500 by year-end. But some warn that high oil prices remain a risk.
"The big qualifier on that is that a lot of the price action we've seen in equity markets and a lot of the improvements we've seen in aggregate earnings expectations are of course due to that energy price move and the higher profit expectations for oil stocks and related companies," said Alex Scott of private money manager Seven Investment Management.
The price of crude has returned above $64 a barrel as US crude stockpiles fell in the wake of Hurricane Katrina.
Clothing chain Next rose 2.6 percent ahead of its hotly anticipated interim results on Thursday.
"The feeling is that the figures are going to be pretty good. Although a few high street people are suffering it tends to be on the white goods line, or people like Harrods and Harvey Nichols. Next's sales have supposedly held up and that should be reflected in the figures," one trader said.
Vodafone also stood out with a 1.7 percent rise ahead of an analyst day next week, which Morgan Stanley said should be positive. It expects the world's largest mobile phone operator to continue taking market share in Europe and doesn't foresee any deterioration at Vodafone's struggling Japanese unit.
Broker research also moved British American Tobacco 1.5 percent higher after Goldman Sachs said it preferred the company above other tobacco firms and favoured the tobacco sector above food and beverage stocks.
Among mid-caps, consumer lender Provident Financial stood out with a 4.4 percent gain despite a dip in its interim profits as dealers said the troubles had been well flagged in July.