The FTSE 100 Index broke through the 5400 barrier this morning as the takeover spotlight fell on the insurance and telecoms sector.
Friends Provident was the highest riser as investors noted the move by French rival AXA to increase its stake in the company to 15% yesterday.
With Friends up more than 4% or 7.5p at 181.25p and rivals in the insurance industry also enjoying gains, the Footsie advanced 29.6 points to 5413.1 by mid-morning.
Mobile phone operator O2 was ahead by 2% or 2.75p at 154.25p as investors saw a potential suitor in Spanish rival Telefonica.
Telefonica was yesterday forced by the Takeover Panel to clarify that its chairman had only made general comments about O2 when answering questions about its acquisition strategy.
The moves by O2 and Friends followed a dour start to trading and excitement was also generated by the news that consumer goods giant Unilever is reviewing the options for its European frozen foods business.
Shares in Unilever climbed 2% or 11p to 581.5p following the announcement.
Mining stocks were strong for the second consecutive session, with Rio Tinto rising 55p to 2125p and BHP Billiton advancing 15p to 861.5p as investors continued to warm to their growth prospects and buoyant global demand for metals.
Supermarket chain Morrisons was unscathed despite unions voting to strike over pay and work conditions, with its shares moving 2.5p higher to 182.5p.
But there were further losses for Kingfisher as investors became more downbeat following half-year results from the B&Q owner yesterday, which showed UK profits down by a third. Shares were down 3.25p to 232.25p.
Elsewhere, Chrysalis shares dropped 1.5p to 150.5p on news that it is in talks to sell its books business to focus on its core divisions of radio stations and music.