Firmer miners helped Britain's leading shares index higher at midday on Monday, as investors' risk appetite improved, but further falls by BP weighed on the energy sector.
At 1040 GMT, the FTSE 100 index was up 25.99 points or 0.5 percent at 5,189.67, extending its recent rally into a fourth session.
"The theme today has been investors moving away from safety asset classes to hunt risk and this could be a good sign for the near term outlook, as long as there are no more sovereign debt aftershocks," said Joshua Raymond, market strategist at City Index.
Miners benefited as base metal prices extended Friday's rally, underpinned by gains in oil and gold.
Silver miner Fresnillo was the top FTSE 100 riser, up 5.0 percent, while Kazakhmys, Eurasian Natural Resources, Vedanta Resources, Anglo American and Rio Tinto took on 2.4 to 3.6 percent.
But energy issues were the biggest blue chip fallers, weighed down by further falls from BP, off 5.8 percent on lingering doubts about the outlook for dividends in the wake of the huge spill in the Gulf of Mexico.
Investors were awaiting the outcome of a BP board meeting on Monday to discuss whether the oil giant will cut or defer its second-quarter dividend meeting.
Peer BG Group lost 0.6 percent, but Royal Dutch Shell added 0.5 percent supported by the firmer crude price and an upgrade in stance for the European integrated oils sector to "bullish" from "neutral" by Nomura.
BANKS BOUNCE
Banks found support as investors' risk appetite returned, with global heavyweight HSBC up 0.8 percent, while Standard Chartered added 0.7 percent.
Barclays took on 2.7 percent. Its investment bank arm said it plans to launch a European "dark pool" trading platform, building on its U.S. platform as part of plans to expand its equities business globally.
And Royal Bank of Scotland added 1.7 percent. Santander, the Spanish bank, is set to buy 318 branches from RBS, having submitted an indicative offer of about two billion pounds in April, the Guardian reported.
But Lloyds Banking Group only added 0.1 percent. The bank is considering a stock market flotation of the chain of 600 branches that it is being forced to sell by European Union regulators, the Sunday Times said.
Morgan Stanley, meanwhile, cut its stance on Lloyds to "underweight" from "equal-weight", saying it faces the biggest risk among UK banks of missing consensus beyond full-year 2010.
Also among the blue chips fallers, Home Retail Group shed 1.3 percent as JP Morgan cut its stance on the Argos stores owner to "underweight" from "overweight" following last week's disappointing trading update.
Britain's economy will grow slower from 2011 than the previous Labour government expected but state borrowing will fall slightly faster than originally thought, the Office for Budget Responsibility said on Monday.
The independent OBR, created by the new Conservative-Liberal Democrat coalition, said the economy should grow 1.3 percent this year, in line with previous forecasts, but growth would only rise to 2.6 percent in 2011.
Labour had expected the economy to grow between 3 and 3.5 percent next year. The OBR also pencilled in slower growth than Labour for the years ahead.
U.S. stock futures pointed to a higher open on Wall Street on Monday, adding to last week's advance and tracking gains in global equities.
