Britain's FTSE 100 index inched closer to 52-month highs on Tuesday, with support services firm Capita rising 3.1 percent on a robust trading update, although weaker drugs stocks capped gains.
Heavyweight pharmaceuticals company AstraZeneca closed 1.4 percent lower and GlaxoSmithKline fell 0.5 percent as traders unwound some of Monday's gains scored on news US drugs giant Pfizer won key rulings which appeared to beef up drug companies' patent protection from generic competition.
"Astra shot up yesterday on the back of the Pfizer story. I just think it's a pullback. Was it sustainable to be up there just on the read-through from Pfizer? Probably not. It's just dribbling back down," said a trader.
Broad-based moderate gains in banks and telecoms helped lift the FTSE 100 to an 8.1 point higher close of 5,547.9 for a second straight 52-month closing high. The index touched a session peak of 5,552.2, pushing back towards the recent 5,574 peak scored on December 7, which was its highest intraday reading since August 2001.
Christopher Iggo, strategist at AXA Investment Managers, said market participants were keeping a low profile as the Christmas holidays approach, with volume a moderate 2 billion shares.
"I guess that if people don't need to do any trading at the moment they're not doing it. The market looks like it's going to end the year on a healthy footing and that's quite encouraging for going into 2006," he said referring to the 15 percent gain in the FTSE 100 since the start of 2005.
"The valuation's still quite attractive for the rest of the market. Perhaps we won't get 15 percent next year but I reckon we could get 8 to 10 percent return," Iggo said.
Shares in support services group Capita, which collects the TV licence fee and London's traffic congestion-charge, headed the blue chip gainers' list after the company said business was going well and should continue strongly into 2006.
"The strong run of earnings growth is showing no sign of coming to an end," said brokerage Seymour Pierce.
Supermarket groups Sainsbury and Morrison also featured among the gainers, adding over 1 percent on hopes of a better 2006 for the grocery chains, which have struggled to fight off competition from larger rivals Tesco and Asda.
Traders said Sainsbury shares were given a lift by weekend press comment that Sainsbury was to attempt to close the gap on Tesco by doubling the amount of new space it opens every year.
Telecoms shares were bright, with mobile giant Vodafone up 0.6 percent after South African competition authorities approved a plan to raise its stake in South Africa's leading cell phone company Vodacom.
Hanson fell 1 percent, after it forecast a rise in pretax profit this year but said weak demand in the UK and high energy costs were a risk in 2006.
Food maker Unilever lost 1.2 percent after J.P. Morgan analysts remained cautious on the stock, saying it should be valued below others in the sector because of a weak earnings outlook.
On the mid-cap index, oil explorer Dana Petroleum slid 10.4 percent after it abandoned a well in Mauritania. Earlier this month, shares of Dana and its partners in the area, Tullow Oil and Hardman Resources, rose when the firms said the Faucon-1 well had hit hydrocarbons.
Software firm Misys climbed 8 percent after it said core banking sector sales rose 10 percent, soothing nerves over a division which sparked a profit warning in September.