Britain's FTSE 100 share index rose 1 percent in early deals on Monday, led higher by banks after indebted emirate Dubai said it has received $10 billion from Abu Dhabi, calming jittery investors nerves.
By 0907 GMT, the FTSE 100 was 52.987 points higher at 5,314.55, adding to gains from the previous session when it ended up 17.20 points, or 0.33 percent.
"Everything is just grinding higher as we head into Christmas with the Dubai debt news boosting the banks," said David Morrison, market strategist at GFT Global.
Banks were in demand as worries about their exposure to Dubai's debt problems eased, with Standard Chartered the best off, up 4.9 percent supported too by a Credit Suisse upgrade, while HSBC, Barclays and Royal Bank of Scotland put on 2.3 to 3.7 percent.
Gains in Lloyds Banking Group were more muted, with the stock up 0.9 percent as underwriters offered in the market the rump of the bank's record rights issue which the group said on Monday had achieved a 95 percent take-up.
Dubai said funds provided by its neighbour Abu Dhabi would help towards repaying a $4.1 billion Islamic bond maturing on Monday, while the excess would be used to meet state-owned conglomerate Dubai World's needs up until the end of April 2010.
Last week's bankers' bonuses concerns were pushed aside by the Dubai news. Barclays Capital president Bob Diamond has said the bank will be deferring up to 60 per cent of its bonuses this year, the Sunday Telegraph reported.
Other financial sector shares found support, with the London Stock Exchange the top FTSE 100 riser, up 6.7 percent as worries that shareholder Dubai Bourse might have to sell its stake in the British firm receded.
Insurers Prudential, Aviva, and Standard Life added 1.0 to 2.9 percent.
COMMODITIES WANTED
Heavyweight commodity issues benefitted too as the demand picture continued to improve, helped again by last week's solid data from major consumer, China.
Among the miners, Lonmin, Vedanta Resources, BHP Billiton, Rio Tinto and Xstrata gained 1 to 2.8 percent.
Oil majors BG Group, BP and Royal Dutch Shell added 0.7 to 1.1 percent.
Among individual blue chips gainers, Whitbread stood out, up 3.1 percent after the hotels to coffee shops operator said in a trading update that it expected its 2009/10 results to "somewhat exceed" market estimates..
There were only a handful of blue chip fallers early on.
AstraZeneca lost 0.5 percent, affected by news the drugs firm has failed to win a summary judgment against generic companies challenging the patent on its blockbuster cholesterol drug Crestor.
Peer GlaxoSmithKline shed 0.2 percent, with medical products firm Smith & Nephew down 0.4 percent and household products group Reckitt Benckiser off 0.6 percent. No significant economic data was set for release from either the UK or the United States on Monday.
Macroeconomic attention was focused on the latest two-day Federal Reserve meeting, which kicks off on Tuesday, with an interest rate decision due after the London close on Wednesday.
"No one has a really strong reason to be selling equities at the moment, and after the recent surprisingly upbeat U.S. non-farm payrolls (employment) report things could surprise on the upside for now," said Morrison.
