Britain's leading share index was up 0.7 percent in early trade Thursday as strong commodity prices boosted miners and oils, while banks were lifted by news Bank of America is set to repay U.S. government bailout funds.
At 0921 GMT, the FTSE 100 was up 39.28 points at 5,366.67, having closed 15.22 points higher at 5,327.39 on Wednesday, extending gains into a third consecutive session.
Banks were the top risers, buoyed by news that Bank of America Corp will repay $45 billion of government bailout funds in a surprise announcement.
HSBC, Lloyds, Barclays and Standard Chartered rose 0.5 to 4.6 percent.
Royal Bank of Scotland gained 3.2 percent but warned it could struggle to hire and retain key staff after the UK government demanded control of bonuses as a condition for insuring its bad debts.
Banks across the industry need to exercise restraint on remuneration, British business secretary Peter Mandelson said on Thursday when asked about bonuses at state-controlled RBS.
"Assets inversely correlated to dollar weakness are going better, in particular metal prices and oils," said Jeremy Batstone-Carr, head of research at Charles Stanley.
"The Bank of America news will also be seen as a positive and we are wading our way through the morass of typically aggressively upbeat outlook comments for 2010 from the investment community," Batstone-Carr said
Energy stocks tracked higher crude prices, which rebounded back above $77 a barrel, following Wednesday's falls.
BG Group, BP, Royal Dutch Shell, Cairn Energy rose 0.9 to 1.5 percent.
Cairn Energy is to seek approval for a 10-for-1 share split.
The relentless march onwards by the price of gold added support for miners, while base metal prices also rose across the board.
Lonmin, Vedanta Resources, Eurasian Natural Resources, Xstrata, Rio Tinto, Anglo American and Kazakhmys put on 0.8 to 1.8 percent.
In a strategy outlook for 2010, Goldman Sachs said it was bullish on commodities, while it raised personal household goods to "overweight", citing in particular luxury and tobacco.
British American Tobacco and Imperial Tobacco climbed 1.2 and 1.4 percent respectively.
KINGFISHER WANTED
Kingfisher added 1.5 percent after Europe's biggest home improvements retailer beat third-quarter profit forecasts and said it is cutting debt more quickly than expected.
Home Retail, Britain's biggest household goods retailer, rose 1.7 percent as a readacross from Kingfisher and helped by UBS, which upgraded its earnings forecasts for 2010 and 2011.
With the market rally broad-based there were very few fallers early on but defensively perceived pharmaceutical issues AstraZeneca and GlaxoSmithKline fell 0.1 and 1.2 percent respectively, shedding some of Wednesday's gains.
Mid-cap British pubs group Marston's rose 2.6 percent and gave a further boost to the sector as the company said trading continued to improve, after posting a 13.5 percent fall in full-year pretax profit.
Punch Taverns, J.D. Wetherspoon and Mitchells & Butler gained 1.3 to 2 percent on the back of the news, which followed strong numbers from Greene King on Tuesday.
Investors will eye news from the latest European Central Bank Council meeting, due at 1245 GMT, and initial weekly U.S. jobless claims numbers will be of interest at 1330 GMT, especially ahead of the November U.S. employment report, scheduled for release on Friday.
