Britain's top share index rose early on Tuesday on strength among miners as metals prices rose and among banks as investors awaited quarterly numbers from Goldman Sachs.
By 0759 GMT, the FTSE 100 index was up 26.02 points or 0.6 percent at 4,228.15, after closing 1.8 percent higher on Monday.
"It doesn't feel as if there's a great deal of appetite to chase prices up, and after the good rise we had yesterday, I think people are just sitting on their hands in front of the Goldmans numbers," said Jim Wood-Smith, head of research at Williams de Broe.
Miners added the most points to the FTSE 100 index, with the sector buoyed as metals prices rallied.
Anglo American, Antofagasta, BHP Billiton, ENRC and Rio Tinto added between 0.8-2.3 percent.
Banks advanced, helped by gains in the U.S. after influential bank analyst Meredith Whitney, who had previously been bearish, said in comments to CNBC television that bank shares were in for at least a short-term gain of 15 percent.
Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland put on between 0.4 and 1.5 percent.
Strength was also seen among insurers. Legal & General, Old Mutual and Prudential added 2.3-4 percent.
Energy stocks pushed higher, as crude rose above $60 a barrel.
BP added 0.7 percent, BG Group firmed 0.5 percent, and Tullow Oil climbed 2.4 percent.
Among other stocks, Unilever gained 0.9 percent as JP Morgan lifted its rating on the consumer goods company to "overweight" from "neutral".
VODAFONE WEIGHS
Vodafone was the biggest single drag on the blue chips, down 1.6 percent, after a downgrade from UBS to "neutral" from "buy" and a cut in price target chilled appetite for the telecoms giant.
UBS said in a note that economic pressures, market share loss and currency effects have combined to put pressure on earnings estimates at the telecoms operator, and that earnings will decline 11 percent this year.
Economic data gave modest cause for optimism.
The British Retail Consortium said retail sales rose in June as a heatwave drove consumers into shops to stock up on summer clothes, picnic food and garden furniture.
The BRC said like-for-like sales rose 1.4 percent last month compared with a year ago, more than reversing a 0.8 percent drop in May.
There was encouraging news from the beleaguered housing market too. House prices in England and Wales fell at their slowest annual pace in almost two years last month while confidence in the price outlook turned positive for the first time since May 2007, a survey showed on Tuesday.
The Royal Institution of Chartered Surveyors' house price balance rose to -18.1 in the three months to June, its best reading since September 2007, from -43.
Investors will look to inflation data for June to be released at 0830 GMT for more insight on the state of the UK economy.
The consumer price index is seen up 0.3 percent for the month in June and 1.8 percent on the year, falling from rises of 0.6 and 2.2 percent respectively the previous month.
But the main focus will be on U.S. corporate performance which will give more of a steer on the likely timing and intensity of economic recovery. Alongside Goldman Sachs, Intel and Johnson & Johnson are also scheduled to release quarterly results.
