The FTSE 100 Index recorded its biggest weekly gain since 2011 today as telecoms shares lifted on the prospect of consolidation in the sector.
Shares rose after it emerged that Three owner Hutchison Whampoa is in talks over a £10 billion deal to buy rival O2, adding to recent consolidation moves after BT entered exclusive talks on a £12.5 billion deal to buy EE.
The activity helped the FTSE 100 Index rise by 36.2 points to 6832.8, representing its seventh session in a row of gains as confidence returns to the market following the stimulus moves in Europe yesterday.
The top flight rose 283 points across the week - amounting to £71 billion - and is now just under 100 points short of its all-time high of 6930.2 set in December 1999.
BT shares were 9.9p higher at 431.1p while Vodafone rose 1.2p to 239.9p on expectations that it may be prompted to strike a telecoms deal of its own.
The £1.1 trillion of asset purchases planned by the European Central Bank weakened the euro, sending the pound up two cents to a new seven-year high against the single currency, at 1.34, as attention turned to Sunday's election in Greece.
Analysts fear that success for the left-wing Syriza party will result in the country defaulting on its debt and eventually leaving the euro.
Sterling dipped below 1.50 at one stage versus the US dollar due to the UK's close trading links to the eurozone.
Oil stocks and mining stocks dominated the fallers board, even though the death of Saudi Arabia's King Abdullah had an upward impact on oil prices.
Brent crude was trading at close to 50 US dollars a barrel amid added uncertainty about Saudi oil policy at a time when prices have fallen by more than half since the summer.
BG Group dropped 19.2p to 891.7p, but BP was 4p higher at 432.4p and Royal Dutch Shell dipped 24p to 2274p ahead of its annual results next week.
In corporate updates, shares in Premier Foods surged by 9% after it finished a challenging year with strong growth over the Christmas period.
Mr Kipling cakes sold particularly well as sales of its frontline brands were 3.5% lower in the quarter to December 31, compared with a decline of 5.1% in the previous quarter. Shares were 3.5p higher at 40.25p.
Elsewhere, shares in discount retailer B&M were 6p higher at 308p after it reported like-for-like sales growth of 4.5% for the 13 weeks to December 27.
It expects to meet market forecasts after strong demand for Christmas decorations and gift ranges over the key trading period.
The biggest risers in the FTSE 100 Index were Associated British Foods up 95p at 3080p, Reckitt Benckiser up 160p at 5560p, CRH up 41p at 1680p and Unilever up 69p at 2854p
The biggest fallers in the FTSE 100 Index were Glencore down 15.4p at 249.4p, Antofagasta down 34.5p at 684.5p, Tullow Oil down 17p at 371.3p and Anglo American down 41.5p at 1103.5p.
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