Britain's top share index was up 0.2 percent by mid-morning on Thursday ahead of the Bank of England's rate decision, as gains in banks and commodity stocks offset weakness in defensive issues.
By 1010 GMT, the FTSE 100 was up 7.85 points, or 0.2 percent, at 3,933.37 in a choppy session, after closing down 0.1 percent on Wednesday, a fourth straight session of losses.
The UK benchmark is down 11 percent this year after sliding more than 31 percent in 2008.
Oil producers gained, helped by higher crude prices. BP, Royal Dutch Shell, BG Group and Tullow Oil strengthened 0.2 to 3.6 percent. In the mining sector, Vedanta Resources surged 8.3 percent after posting higher fourth-quarter output of its two most profitable products, zinc and iron ore, and said it had shut down some aluminium and copper operations to cut costs.
Firmer metal prices also aided mining shares, with Xstrata, Antofagasta, Kazakhmys, Fresnillo and Eurasian Natural Resources rising 3.5 to 6.7 percent.
The Bank of England (BoE) is widely expected to leave interest rates unchanged at their historical low of 0.5 percent until June next year as the economy continues to struggle in the throes of a deep recession.
Having cut rates to rock bottom, the BoE has turned to quantitative easing measures and investors will be looking out for any comments on the progress or possible expansion of this new policy.
"It's just a little bit of caution about what (BoE Governor) Mervyn King is going to say," said Manus Cranny of MF Global Spreads.
"He really does need to make a statement today to redeem his position and his stand behind quantitative easing … The market really needs to see he is committed to the programme."
Banks were other standout gainers on the FTSE 100 after talk Barclays could announce the sale of asset management unit iShares to private equity firm CVC Partners on Thursday, people familiar with the matter said.
Barclays shares were up 6.4 percent.
The sector was also boosted by overnight gains from U.S. financials. HSBC, Royal Bank of Scotland, Lloyds Banking Group and Standard Chartered put on between 0.3 and 5 percent.
Goldman Sachs said in a note that it was confident the worst in the economic cycle was past and recommended investors to take further positions in cyclicals, upgrading industrials to "overweight" and downgrading healthcare to "neutral".
The broker also lifted technology, utilities and travel and leisure to "neutral", while it downgraded food and beverage to "underweight".
"Consensus earnings expectations remain too high for this year, in our view, and we expect large downward revisions over the next few months, with the Q1 reporting season a catalyst," it said. "But growth and value metrics are likely to be less a driver of relative performance at this stage of the cycle." GlaxoSmithKline, Diageo, SABMiller, Vodafone, BT Group, British American Tobacco, Unilever, Cadbury and Reckitt Benckiser fell 0.7 to 3.6 percent.
