The FTSE 100 Index racked up its fourth straight session of gains today despite dismay at the latest development in the O2 takeover.
The mobile giant lost almost 6% of its market value after German firm Deutsche Telekom said it was not planning a counter bid to rival the £17.7bn (€26bn) takeover of O2 by Telefonica.
However, this was not enough to stop the wider market moving higher, and the Footsie closed 14.3 points up at 5358.6.
Catering group Compass led blue-chip stocks into positive territory as investors took the view that there was substance to reports that private equity firms such as Texas Pacific Group were contemplating a bid. Shares rose nearly 4% or 7p to 197p.
A string of financial stocks also helped lift spirits. One trader said recent positive feeling towards housebuilders was rubbing off, since it was an indicator of future lending potential.
Northern Rock led the pack with a rise of 19.5p to 818p, followed by HBOS up 20p to 864p and Royal Bank of Scotland, 29p higher at 1604p.
Insurer Royal & Sun Alliance ticked 0.25p higher to 100.75p after settling a long-running legal row in the United States. R&SA also announced it had completed the sale of its US Nonstandard auto business following approval from regulators across the Atlantic.
But O2 headed the Footsie losers as investors believed competition issues and a lack of financial clout would rule out many of the big mobile phone operators from fighting Telefonica for control. Its stock dropped 11.75p to 197.5p.
Elsewhere, news that Ireland’s biggest telecoms operator had received an approach that could lead to a takeover offer sent its shares soaring 17%. Eircom, which is listed in both London and Dublin, advanced 0.35c to a record €2.42.
The mood was mixed elsewhere in the telecoms sector with blue-chip Vodafone unchanged at 149.5p and BT Group off a penny at 209.75p, but second-tier firm Virgin Mobile lifted 13p to 317.5p, a rise of more than 4%.
Outside the top flight, aviation services firm BBA rose 6% or 17p to 308p after announcing plans to spin off its unit making fibres for products such as nappies and shoelaces.
Celebrity jeweller Theo Fennell lifted more than 14% or 5.5p to 43.5p after being approached by a party wishing to make a significant investment.
But news that booming demand for Bluetooth headsets and mobile phones had helped Cambridge Silicon Radio more than double its third-quarter profits was not enough to inspire investors. Shares weakened 17p to 696p as investors focused on revenues guidance for the fourth quarter.
The highest Footsie risers today were Compass Group up 7p to 197p, International Power rising 8p to 237p, Enterprise Inns up 26.5p to 815.5p and Hilton rising 9p to 350.5p.
The heaviest top flight fallers were O2 down 11.75p to 197.5p, Xstrata losing 36p to 1280p, BOC Group down 18p to 1092p and Cable & Wireless losing 1.25p to 114.75p.