Britain's leading share index recovered poise to end higher on Friday, buoyed by gains in hotel and leisure stocks after some welcome disposal news from Hilton and after US inflation data eased investors' fears about higher interest rates.
Shares in Hilton Group raced 13.4 percent higher to close at 345-1/2 pence, spurred by news it was in talks to sell its hotels to US-based Hilton Hotels for an expected 3.6 billion pounds, more than anticipated.
Dealers said the share price surge was also boosted by hedge funds scrambling to cover short positions in the stock.
"Following a sale of its hotels business, Hilton Group would be left as a stand-alone UK betting operation (Ladbrokes). Speculation over private equity interest in Ladbrokes could increase following the separation of the business, especially in light of the recent purchase of Coral by Gala," Goldman Sachs analysts said in a note.
The prospective disposal also lifted shares in rival Intercontinental Hotels 4.9 percent to 723 pence as investors scrambled to re-rate leisure firms in the wake of the news. Leisure firm Whitbread gained 1.4 percent.
The broader market received a lift in mid-afternoon from US data that showed a smaller-than-expected increase in a key measure of inflation.
Although the FTSE 100 share index ended the week 1.6 percent lower - primarily on concerns that rising costs would prompt the Federal Reserve to increase interest rates - the benchmark gained 9.8 points on the day to close at 5,275.0.
"What we've seen today is a slight reversal in interest-rate expectations," said Robert Parkes, an equity strategist at HSBC Securities.
"Our economists are quite dovish, they don't see too many more rate rises coming in the United States - perhaps one, or maybe two. In the UK specifically they see rates coming down aggressively next year. We think both those factors will lead to the market trending higher."
Broker upgrades helped other blue chips, with hedge fund manager Man Group rising 2.1 percent after Merrill Lynch added the stock to its "Europe 1" recommended list.
Meanwhile telecoms firm BT Group added 3.8 percent, its recovery from Thursday's fall aided by German bank WestLB upping its stance on the stock to "neutral" from "underperform", saying concerns about its government IT projects were overdone.
The oil sector was the weakest, with BG Group the top blue chip faller on the day with a loss of 2.5 percent, and BP down 1.4 percent.
Rising commodity prices had been the key driver of the market's rise over the past three months, with BP and Shell benefiting from the prospect of large share buy backs as crude prices seemed to rise inexorably.
Among mid-caps, JJB Sports was among the top FTSE 250 gainers with a rise of 6.2 percent on talk that the owner of London sportswear store Lillywhites was building a stake in the sporting goods retailer.
Brokerage Seymour Pierce doubted this would lead to a take-over and said JJB's trading performance will continue lag its rivals.
Fellow mid-cap retailer Somerfield gained 3.2 percent to 193p - below the 197 pence per share offer for the grocer from a consortium led by buyout firm Apax. The shares had earlier hit a session high at 198-3/4p.
Elsewhere among merger and acquisitions, there was a disappointment in the shape of Aegis, with shares in the media buyer shedding 4 percent following a report that French advertising firm Publicis had decided against a friendly take-over.
Just before the market close, Britain's WPP confirmed it was in talks with a private equity partner to discuss making a cash bid for Aegis, helping its shares recover from an earlier low at 127p to close at 132-1/2p.
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