The FTSE 100 rose on Thursday after a stronger Wall Street close, driven by utilities as AWG surged 12 percent on news of a bid approach.
That boosted the sector with gains of 4.6 percent for Kelda Group , 3.9 percent for Severn Trent , 3.7 percent for United Utilities and 4.6 percent for Northumbrian Water .
A strong start on the back of Wall Street, said one trader. And the utilities are flying on bid talk swirling around the sector, and better commodity prices are also helping.
By 9:00 a.m., the FTSE was up 33.5 points, or 0.6 percent, at 5,925.7. U.S. stocks hit their highest level since May as oil stocks rallied.
The FTSE was also buoyed by resources stocks after a strong performance in base and precious metals, with BHP Billiton , Rio Tinto , Anglo American and Kazakhmys all up about 2 percent.
Among oil producers BP and Shell both rose after crude oil bounced back above $64 on fresh supply concerns from Iran.
Wolseley led the gainers, rising 5 percent after Deutsche Bank upped its target price on the stock on the potential for a rebound in the U.S housing market. The stock was also supported by further speculation around Hanson, whose shares rose more than 4 percent on Wednesday as traders speculated that Mexico's Cemex may make a bid for the building materials firm. Hanson rose 0.2 percent on Thursday.
Owner of B&Q home improvement stores Kingfisher rose 2 percent or 5 1/2 pence after reporting its first half results.
But owner of the Argos retail chain GUS fell 2.1 percent after the company, set to split into two FTSE 100 entities next month, reported a slight slowdown in growth at its credit information business and continued mixed results from its retail operations.
Drug maker Glaxosmithkline fell 0.6 percent after a new diabetes drug from rival firm Novartis AG was found to cut blood sugar levels as much as Glaxo's established medicine Avandia and without the side effects, researchers said.
South African insurer Old Mutual fell 1.9 percent despite posting a 36 percent increase in first half profit.
Among the small cap stocks, online gaming operator 888 , generator supply company Aggreko and consumer lender Cattles all rose after reporting first half results.
Premier Foods led the mid cap losers, down 3.8 percent, after saying it was no longer in talks to buy businesses from United Biscuits, paving the way for rival bidder, private equity firm Blackstone, to win a hard fought takeover battle.