The share index rose in light early trade on Friday, tracking overnight gains on Wall Street and in Asia, as the prevailing downbeat sentiment surrounding the euro zone and concerns of debt contagion kept investors sidelined.

The FTSE 100 <.FTSE> was up 43.95 points, or 0.8 percent, to 5,488.77 by 8:56 a.m.

Top gainer on the index was British Airways and Iberia owner IAG , up 4.5 percent after raising growth and cost savings targets and saying it expected an operating profit of around 1.5 billion euros (1 billion pounds) in 2015.

On the downside, BG Group fell 1.2 percent with traders citing a read across from Portuguese oil company Galp , whose shares slumped after it sold a stake in its Brazilian unit for $3.5 billion (2.1 billion pounds).

London's blue chips remain on course for their second week of losses, as Europe's debt storm threatens Italy and, potentially, Spain.

The market will again be dictated by what comes out of Europe in the coming hours. Any gains we see will be tentative at best and at most buying in on the dips, said Jimmy Yates, head of equities at CMC Markets.

There is a sense that we have reached a turning point. Politicians have realised tough decisions need to be made but whether it will be enough to save Europe remains to be seen.

Investors will be keen on the outcome of Italy's Senate vote on Friday on austerity measures demanded by the European Union. That will come hours after U.S. President Barack Obama ratcheted up pressure for more dramatic action as he spoke with German Chancellor Angela Merkel and French President Nicolas Sarkozy.

Investor nerves have been calmed as both Greece and Italy sought to end political uncertainty in their countries by moving towards interim leaders.

Greece has a new 'unity' government. Italy could have one soon. Spain has elections shortly. Greater clarity and less uncertainty around the corner, Citigroup analyst Jonathan Stubbs said.

Investors should stay in risk management mode with equities remaining range-bound and buy into weakness, he said, highlighting big cheap defensives such as Vodafone and Unilever .

RISK ON

For the time being, until more updates seep out of Europe, investors were happy to buy on dips, particularly in equities that have led the index lower such as miners and banks.

Those two sectors have lost more than a quarter of their value this year, as worries persist that the euro zone debt crisis could cripple the fragile banking sector and stunt global growth.

Part state-owned Lloyds Banking Group and Royal Bank of Scotland added 2.5 percent and 2.9 percent, respectively.

Miner Anglo American extended the previous session's gains, up 2.1 percent as brokers raised their target prices in response to its sale of part of its interest in its Chilean copper asset Anglo American Sur on Thursday.

Rolls-Royce climbed 1.7 percent after the British enginemaker said it had performed well in the third-quarter and expects to deliver strong growth in full-year profit, shrugging off turmoil in financial markets.

On the economic front, British wholesale inflation numbers for October will be released at 9:30 a.m., with PPI input prices seen down 0.1 percent on the month, and PPI output prices seen up 0.2 percent.

(Editing by Dan Lalor)