The leading share index pushed higher in early trade on Thursday, led by a rally in banking stocks headed by Royal Bank of Scotland after the lender's in-line full-year results offered hard-pressed sector investors some relief.
After initially opening lower, RBS jumped 5.2 percent, recouping all and more of the previous session's falls, as the part-state-owned bank posted an as-expected fourth-quarter loss of nearly 2 billion pounds, hurt by writedowns on assets and restructuring costs.
Given the dreadful share price performance over 5-10 years, we think the cost of RBS's universal banking model has already been passed on to shareholders and customers, said Seymour Pierce analyst Bruce Packard in a note.
We continue to believe that RBS core Retail and Commercial Bank is worth at least 40 pence per share, which gives enough upside to justify our buy recommendation, Packard added.
Peer Lloyds Banking Group , also majority-owned by the British government, rallied 4 percent ahead of its full-year results due on Friday, while Barclays gained 3 percent.
At 0915 GMT, the FTSE 100 <.FTSE> index was up 27.80 points, or 0.5 percent at 5,944.41, having closed 0.2 percent lower on Wednesday after hitting a seven-month closing peak on Monday.
The FTSE looks finally to be pushing out of the 5,920 straight jacket this morning, and if it can manage that break out its 2012 highs must be in sight, said David Morrison, market strategist at GFT Global.
Equity markets also got a boost from better-than-expected German IFO business sentiment index which countered weaker than expected euro zone purchasing managers data released on Wednesday.
Heavyweight commodity issues got a boost from the better European data as the demand picture improved, with miners <.FTNMX1730> rallying after recent falls as copper prices moved higher, and integrated oils <.FTNMX0530> also gaining as crude pushed ahead.
Aside from RBS's numbers, a big batch of other blue chip corporate news also provided direction in London.
RSA Insurance was the leading FTSE 100 faller, down 3.3 percent after it posted higher-than-expected profit for 2011 as cost cuts helped offset big catastrophe claims, but said it would increase its shareholder dividend more slowly because of weak investment returns.
Outsourcing group Capita was a top blue chip gainer, up 3.7 percent after posting a 6 percent rise in full-year profit, and said a buoyant sales environment left it confident of good prospects in 2012.
Capita shares jumped on Wednesday following news of a civil service contract win, and Charles Stanley technical analyst Bill McNamara thinks further upside is still possible in the short to medium term, with an initial target of around 710 pence.
Outsourcing peer Serco added 1.5 percent.
Tobacco was a weak blue chip sector as investors' improved risk appetite made its defensive characteristics less attractive, with British American Tobacco shedding 0.7 percent after its full-year results failed to excite despite a 1.25 billion pounds share buyback.
On the domestic data front, February's CBI industrial trends-orders survey will be released at 1100 GMT, while across the Atlantic, the latest U.S. weekly initial jobless claims numbers are due at 1330 GMT.
(Reporting by Jon Hopkins; Editing by Hans-Juergen Peters)