Britain's benchmark index rose 0.8 percent on Friday to hit its highest closing level in four months as surging crude prices pumped oil shares higher, while bid activity powered British Energy. The FTSE 100 closed up 52.5 points at 6,304.3, but well off its day's high of 6,348.6 after a survey showed US consumer confidence tumbled to its lowest in 28 years this month.
The index gained 1.6 percent this week, but is still down 2.4 percent for the year. "We had the lowest consumer confidence figures in the US since the 1980s so that's really what turns the US negative. No doubt that's going to put a cap on UK stocks as well going into next week," said Martin Slaney, head of derivatives at GFT Global Markets.
Topping the gainers, British Energy leapt 5.2 percent to 715.5 pence after saying it had received a range of take-over proposals, including some prices above Thursday's closing price of 680 pence. London Stock Exchange surged 5.1 percent on market talk of bid interest after Sanford Bernstein said in a report that the fall in its share price had brought the UK bourse within reach of Nasdaq and NYSE Euronext.
BP advanced 1.5 percent, Royal Dutch Shell rose 2.8 percent and Tullow Oil put on 3.2 percent. Miners were mixed, with Anglo American, Xstrata, Lonmin and Vedanta Resources up. But Antofagasta, Eurasian Natural Resources, BHP Billiton and Rio Tinto were down.
Morgan Stanley said investors would be wise to lock in profits in miners and oil shares as the two sectors had outperformed by 66 and 30 percent respectively in the last 12 months. "Both levels (of outperformance) are unusually high and are historically consistent with a subsequent period of underperformance," the broker said in a report, adding investors should favour defensive stocks, such as tobacco.
Major European indexes also finished the day higher, while US stocks eased after the Reuters/University of Michigan consumer sentiment survey although data showed construction starts on new homes rose stronger than expected.
Banks remained weak, with Royal Bank of Scotland off 3.4 percent after the Financial Times said Warren Buffet's Berkshire Hathaway Inc had pulled out of the bidding in the 7 billion pound ($13.6 billion) auction of its UK insurance business. RBS was not immediately available for comment. Barclays lost 2 percent and HSBC ticked down 0.1 percent, but HBOS and Lloyds TSB were higher.
The Bank of England reiterated its mortgage swap plan has no upper limit and refused to forecast any final total after media reports that banks could exchange assets worth well above the estimate of initial demand.
British Airways climbed 4 percent after it unveiled its first dividend payment since 2001 after meeting forecasts with a 45 percent rise in annual profit. Sainsbury shed 1.3 percent to extend recent losses after recent negative broker comments, which followed the supermarket group issuing results on Wednesday.