Britain's FTSE 100 pushed ahead on Thursday, buoyed by strong results and bullish earnings forecasts, but gains were capped by continued weakness in crude prices, hitting oil heavyweights and utilities.
Supermarket Morrison traded up 6.4 percent after posting a return to profit in its first half and saying targeted earnings improvements were on track as it recovers from its problematic takeover of Safeway.
Excellent numbers and further confirmation of the company's growing presence in the sector, said one trader of the results. Sainsbury climbed 2.1 percent on positive industry sentiment, dealers said.
At 1030 GMT the FTSE 100 index of Britain's leading shares was up 21.2 points, or 0.4 percent, at 5,887.4 points, finding further support from CBI data showing September factory orders fell at their slowest pace in nearly two years, confounding expectations of a much sharper deterioration.
Oil steadied above $61 a barrel, climbing back from lows below $60 but news of rising U.S. stockpiles and predictions of lower prices by year-end hit BP, Cairn Energy and BG, all down around 1 percent. BG was also hit after Goldman Sachs reduced its price target on the stock.
Subdued oil prices are generally better news for markets, but not for ours when oil companies account for a chunk of the index, said Stuart Fraser, investment director at Brewin Dolphin. Prices are holding up today but a lot of heat has vanished from the oil market, and that can hit utilities too, which are generally sensitive to energy prices.
As winter gas prices fell to new contract lows on easing supply concerns generators Drax Group and International Power led the list of FTSE losers, both down around 2 percent.
Drax did spectacularly well when gas prices went through the roof, but now the interconnectors are opening up and gas prices for this winter are falling, the market feels that if this becomes a persistent trend, which it looks like it could, then the company is going to have a tough time, said one trader.
But miners were stronger, responding to firmer base metal prices. Anglo American and Rio Tinto added around 3 percent after being linked with a counter-bid for Australia's Excel Coal, subject of a takeover offer from Peabody Energy. Analysts said Anglo was also up on media reports of buying interest from Chinese investors.
Miners are worried where to get supplies from, said one analyst. If Anglo America could get some of it from China, some kind of joint deal with a Chinese company could be attractive but that depends on its view of the Chinese economy and whether it will continue to boom. In M&A in the mining sector, anything is possible.
News and information provider Reuters Group jumped 2.4 percent following upbeat comments from Morgan Stanley. The bank's media analysts said the company's revenue growth forecast may be conservative after a good summer. ITV Group rose 1.8 percent on fresh takeover rumours, traders said.
Meanwhile, caterer Compass Group rose 2.7 percent amid market talk the company could be broken up, traders said. The company was also the subject of a bullish research note from Exane BNP Paribas.
Broker ICAP climbed 3.5 percent. Traders said there had been some reallocation of funds into the stock after the appointment of a new finance director, and out of rival Man Group which fell 0.9 percent.
But Rolls Royce shed 0.4 percent after Airbus parent EADS confirmed fresh delays to its flagship A380 project for which the British company supplies engines.
Among mid-cap stocks Croda International climbed 5 percent after UBS upgraded the stock, citing the potential for business development and synergies after the reverse takeover of Uniquema. Carphone Warehouse rose 3 percent after media reports the competitive field to acquire AOL's UK operations had reduced, strengthening the phone retailer's hand.
(Additional reporting by Michael Taylor, Rebekah Curtis and Alex Davidson)