Revised hopes for Pfizer’s attempt to take over AstraZeneca helped the latter’s shares firm more than 2 per cent.
The UK-based group has repeatedly spurned the advances of Viagra maker Pfizer but the board came under pressure from large investors to consider holding talks.
With other analysts arguing that Astra could be worth more than Pfizer’s £55 a share offer in the long term, the stock lifted 111.5p to 4,420p.
Dominic Rossi, chief investment officer for equities at Fidelity, said: “The Astra board has taken a very difficult decision. We will now have to wait two to three years to see whether they were right. With a little luck they could well be.”
Traders initially took a dim view of the latest Bank of England minutes which hinted that some policymakers are close to voting for a rate rise. But after a strong open on Wall Street the FTSE 100 gained upward momentum and closed 19.04 points higher at 6,821.04.
Jitters in the supermarket sector returned as Deutsche Bank placed a “sell” rating on Morrisons, saying it found the stock’s recent bounce unjustified.
Morrisons was a heavy faller with a decline of 4.5p to 205p, while Sainsbury’s dropped 1.8p to 337.7p and Tesco slipped 2.3p to 303.8p.
In corporate updates, shares in luxury goods group Burberry edged up 3p to 1,518p after it reported an 8 per cent rise in annual profits but warned that sterling’s strength may dent profits this year.
Meanwhile, FTSE 250 stock FirstGroup recovered from a weak start seen after it announced it would not pay a dividend for the second year in a row as it focuses on the recovery of its UK bus and North American school bus divisions. With profits slightly ahead of schedule, the shares closed 2p higher at 134.2p.