Britain's leading shares climbed for a fourth straight day on Friday to hit a 5-week high, pulled up by strong mobile phone operators O2 and Vodafone amid optimism for their earnings and payouts, while property stocks were buoyed by more sector consolidation. O2 shares jumped 3.1 percent in the wake of this week's strong results, which in turn lifted confidence that its bigger rival Vodafone will also deliver strong annual results and make positive comments on dividends and share buybacks. Vodafone added 3 percent after Sanford Bernstein advised clients to buy its shares before Tuesday's figures, while Investec Securities said the mobile giant could hand back close to 10 billion pounds of additional cash flow to shareholders.
But weak banks held gains in check, with Barclays slipping 0.8 percent to 543 pence as dealers said Morgan Stanley sold a batch of 12 million shares at 545p a share, while Royal Bank of Scotland lost 0.6 percent after ABN Amro slashed its rating on the stock to "reduce" from "buy", saying profitability at the UK bank had peaked.
The FTSE 100 share index closed up 9.1 points at 4,971.8, after hitting 4,981, its highest level since April 11. Telecoms stocks added 13 points to the FTSE's value.
The index ended up 1.7 percent over the week as concerns about problems at a large hedge fund faded and analysts said worries about consumer spending may have been overdone, especially as the next move in UK interest rates is expected to be down.
But the day's volume was a slim 2.3 billion shares and a cautious tone prevailed; Roger Cursley, UK strategist at Investec, said it was too early to predict rates will fall, while other shockwaves could be felt from continued weakness in consumer spending, EU constitution referendums and a possible revaluation of China's currency.
"All in all I think the market is being a bit brave this week and I'm not convinced it will hold onto this," he said. "For later on in the year I'm more positive, as if there's a move to defensives the UK is a very good place to be."
Household products giant Unilever added 1.4 percent after it agreed to sell a fragrance business to Coty for about $800 million, continuing its program of selling non-core businesses to focus on food, cleaning and personal care brands.
Property stocks were livened up by the prospect of more deals after mid-cap Pillar Property said it was in advanced talks over a 770 million pound take-over of the firm.
Shares in Pillar, which is Britain's biggest retail park manager and has assets in the City of London, jumped 6.3 percent to 845p after it said it had received an approach worth 855p. It declined to name its suitor, but analysts said it was likely to be a major property firm such as British Land or Hammerson. British Land rose 2 percent, Land Securities firmed 1.3 percent and Hammerson added 1.8 percent.
Takeover speculation also continued to rumble around several other stocks, but most of the talk was vague. Cable & Wireless added 1.2 percent as the upbeat mood across telecoms was joined by vague talk that France Telecom could be casting an eye on the UK firm. Dealers said C&W could also boost its dividend payout at results next week.
Retailers found some support from strong weekly sales figures from unlisted John Lewis. Electronics chain Dixons was one of the best performers with a 1 percent gain as Deutsche Bank advised investors to switch into it from health and beauty chain Boots, down 0.7 percent.
Miners were on the back foot after a fall in the copper price, with Rio Tinto down 1.5 percent and Antofagasta off 1.9 percent, but Anglo American bucked the gloom and added 1.6 percent after Morgan Stanley upgraded it to "overweight".
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