LONDON (AFP) - The FTSE 100 ended the session in the black as merger and acquisition speculation continued to spur the financials sector forward, offsetting a mixed performance on Wall Street, dealers said.
At the close of trade, the FTSE 100 was up 25.3 points at 4,707.1, with the broader indices mixed.
Volumes were solid with 2.8301 billion shares changing hands in 229,675 deals.
Vodafone was the most traded stock, with 169 million issues switching owners, followed by BP which saw 119 million shares being exchanged.
Across the Atlantic, the DJIA was down 25.0 points at 10,191.5 at the time of the London close, while the Nasdaq was up 1.54 at 1,953.94.
US stocks traded mixed as oil prices flirted with 51 dollars a barrel and weaker-than-expected economic data were tempered by some buying interest in the technology sector.
The Institute for Supply Management non-manufacturing index slipped to 57.6 percent in September from 58.2 percent in August, compared to expectations of a rise to 58.8 percent.
In London, shares in Sage Group, the supplier of accounting and business management software, rose 2.99 percent to 172 pence per share.
But they were outperformed only by Man Group which the FTSE 100 leaderboard, hitting 1,296 -- a 3.76 percent rise -- on renewed speculation Merrill Lynch is mulling a bid for the hedge fund.
Dealers said the rumour on Man Group may hold some truth, highlighting the recent acquisitions of hedge funds by investment banks.
Last month, JP Morgan Chase agreed to buy control of Highbridge Capital Management and Lehman Brothers has been rumoured to be in talks to buy hedge-fund firm GLG Partners.
Man Group's peer Schroders rose eight pence to 657-1/2.
Meanwhile, Barclays -- up 6-1/2 at 562-1/2 -- and Lloyds TSB -- up 1-1/4 at 445 -- continued their ascent on talk of a potential bid from Citigroup.
Among the oil majors, BP was 14-1/2 pence higher at 549, and Shell was up 6-1/4 to 418-1/4.
The sector was buoyed by a raft of positive broker comment.
Morgan Stanley raised its crude oil forecasts and target prices for a number of European firms and assumed coverage on BP with an 'overweight' stance and on Shell with an 'equal-weight' stance.
Meanwhile UBS raised its target price for BP to 535 pence from 500.
Aside from the oil sector, mining issues were also in demand, with BHP Billiton standing out, up 12-1/2 pence at 598 following gains in Australian trade overnight on share buyback moves.
Shares in Antofagasta rallied 12 pence higher to 1,132, recovering following yesterday's downgrade in rating by Deutsche Bank.
On the downside, British Airways was the second biggest loser, dropping 3.12 percent to 209-3/4, after the flag carrier reported a 0.2 percent fall in premium passenger traffic in September compared to Dresdner's forecasts of a three percent rise.
Total traffic in September rose 3.6 percent, in line with forecasts, while the load factor increased 3.8 basis points to 72.4 percent.
In response, HSBC reiterated its 'reduce' rating on BA.
Also on the downside, BSkyB fell 6-1/4 to 483 on reports that subscriber additions this quarter were low, and ITV is about to cancel a lucrative deal with the broadcaster.
ITV shares were the biggest fallers, down 3.18 percent at 106-1/2.
Beleaguered supermarket chain Sainsbury dropped four pence to 255-1/4 after announcing its finance director Roger Matthews is to leave the company next March.
The high profile departure comes ahead of a strategic review by the group, with analysts concerned that Sainsbury will make some grim comments about the current state of the group's business and possibly a deep cut in the dividend payout.
News that Bunzl, the international distribution and outsourcing group, bought the disposable consumables and packaging distribution business of Cospak in Australia for an undisclosed sum, sent shares down 2-1/2 pence to 424.
BAE Systems was another casualty, shedding 5-1/2 pence at 233 on profit-taking after Monday's boost from news of an upgrade to 'buy' by Cazenove.