Strength in market heavyweight Vodafone, following a broker upgrade, and in other defensive stocks helped Britain's leading share index notch modest gains in thin Wednesday trade as investors positioned themselves ahead of the UK Budget.
Vodafone, up 1.1 percent, accounted for more than half of the FTSE 100 index's points gain as Goldman Sachs upgraded the mobile phone operator to its conviction buy list.
With the stock implying negative long-term growth and trading at a discount to peers, we see substantial rerating potential, Goldman said in a note.
At 1139 GMT, the FTSE 100 index was up 7.44 points, or 0.1 percent, at 5,898.85, recovering marginally from Tuesday's 1.2 percent fall.
Volume was moderate, with around 30 percent of the 90-day daily average traded, as investors awaited British finance minister George Osborne's third budget speech, due to start around 1230 GMT.
Aside from Vodafone, other defensively perceived stocks featured among gainers, including tobaccos and drinks firms, in spite of likely Budget duty increases, with Imperial Tobacco up 1.6 percent and Diageo ahead 0.6 percent.
Be defensive on positions and wait to see the likely impact on key sectors. We still see downside risk to growth and the market is still trading a high level and, even with some positive news, downside risk is more elevated, Atif Latif, director at Guardian Stockbrokers, said.
Broker comment accounted for other blue-chip gainers.
Wolseley, the world's biggest building supplies company, was the top blue-chip gainer, up 3.3 percent, as Credit Suisse raised its target price ahead of U.S. housing data due later in the session.
Serco rose 1 percent after HSBC upgraded its recommendation on the outsourcer to overweight from neutral, saying the firm is its preferred pick among UK outsourcers which will likely see further pressure from UK government austerity.
SAINSBURY STANDS OUT
J Sainsbury was also a key improver, up 3 percent as Britain's third-biggest supermarket group beat forecasts for fourth-quarter sales growth as it won market share from rivals.
Sainsbury's Q4 showed a pick up in both LFL (like-for-like)volume and the pace of market share gain. The investments in 'fresh' are working, and convenience, non-food and the web are helping too. Sainsbury is easily the best bet in the sector but forecast momentum is only flat and thus, from 11 times PE, the shares are a hold, said Oriel Securities in a note.
Elsewhere on the high street, Debenhams, which posted first-half results on Tuesday, was the biggest FTSE 250 gainer, up 4.5 percent, as Citigroup raised its rating on the department stores group to buy on valuation grounds.
On the downside, reversals from earlier gains by heavyweight miners, and weakness in energy stocks, restrained the blue-chip rally as investors preferred to avoid risk-sensitive issues.
ENRC was the worst-performing miner, off 2 percent, after it posted a slight miss in full-year results, according to Numis.
(ENRC) appears to be putting its skeletons behind it and getting on with business, but struggling to gain traction in a difficult market, Numis said.
Ex-dividend factors knocked 3.1 points off the FTSE 100, with Aviva, InterContinental Hotels, Smiths Group and Standard Life losing their payout attractions.