Britain's FTSE 100 index edged higher on Friday, led by mining companies as metal prices firmed and by banks on bid talk surrounding the sector.
Lloyds TSB rose 1.3 percent and Barclays 0.7 percent on hopes that Bank of America will bid, traders said.
With volumes likely to be light ahead of the long British holiday weekend, something like the Bank of America takeover talk is driving things higher, said one trader.
Miners were higher after copper rebounded from Thursday's losses. BHP Billiton, Rio Tinto and Anglo American all climbed around 1 percent. BHP rallied despite the company cautioning against financial markets expecting more industry share buybacks due to the high profits being generated by mining companies.
Meanwhile BP and Royal Dutch Shell both rose around 0.5 percent after NYMEX crude climbed above $73 a barrel on storm fears in the Gulf of Mexico.
By 0745 GMT, the FTSE index of Britain's top shares was up 22 points or 0.4 percent at 5,890.7, extending Thursday's gains. The index is down 4 percent from its five-year high of 6,137.1 points struck in April, but is still up 4.8 percent so far this year.
Oil stocks drove a modest rise for U.S. shares on Thursday, while Asian shares were also higher on receding prospects for interest rate rises in Japan.
Leading the gainers, steelmaker Corus jumped 2.6 percent on renewed bid speculation following recent talks with Russia's largest steel producer Evraz. A Evraz spokeswoman said: The firm's managers are not involved in any M&A talks. I can only point to a recent interview of our chairman Alexander Frolov. Frolov said this week Evraz has held talks with Corus but has no plans to buy it.
They've got figures next week and the old bid speculation is floating around again, said one trader. It's certainly bid speculation, said a second.
Telecom giant Vodafone rose 0.9 percent after Belgium's Belgacom said it would take full control of mobile operator Proximus after agreeing to buy Vodafone's 25 percent stake for 2 billion euros.
Elsewhere fund manager Henderson Group rose 5.5 percent after posting solid first-half profits and pointing to promising trends in business performance while bus and train operator Stagecoach was up 0.7 percent ahead of its annual investor meeting.
Among the losers Blacks Leisure continued to fall in the wake of Wednesday's news of flagging sales. The stock fell 0.8 percent despite newspaper speculation of stakebuilding in the clothing and camping gear retailer.
Rexam lost 1 percent on profit-taking after the drink cans maker jumped 7.5 percent on Thursday on the back of a bullish outlook, traders said.