A positive opening on Wall Street helped buoy London stocks, with the Dow Jones industrial average up more than 85 points in early trade, helped by signs of growing business optimism.
However, investors are cautious as the eurozone woes continue to weigh on their minds.
Germany is expected to back a bill today that will ratify the eurozone bailout fund, however concerns are growing after comments by Spain's Prime Minister, Mariano Rajoy, that he will not accept certain conditions in return for a European Central Bank proposal to buy Spanish bonds.
There was added uncertainty ahead of an announcement from the US Federal Reserve, when policymakers will be under pressure to detail further asset purchases under its quantitative easing programme.
With trade deficit figures also out in the UK, investors took little cheer from news that the overall trade deficit narrowed to £1.5 billion, down from £4.3bn pounds in June.
The pound rose against a weakened dollar – to 1.61 US dollars – amid expectations for more QE in the US. But hopes the eurozone bailout will gain German legal backing helped the euro strengthen, with sterling falling to 1.25 euros.
Among stocks, Royal Bank of Scotland continued to offer some support to the market amid ongoing speculation it will unveil plans for the flotation of its insurance arm Direct Line Group as early as this week.
The lender's shares were ahead 11.7p at 264.7p.
Outside the top flight, shares in SuperGroup leapt higher after the Superdry owner eased concerns over recent trading conditions by reporting UK like-for-like sales growth of 1.7% for the 13 weeks to July 29.
The shares were 36p higher at 567p.
Gambling firm Betfair shares were lower despite the company reporting a 13% increase in revenues to £91.6 million in the three months to July 31.
The group also reported a 21% increase in sport bets to £72.3m but investors were not convinced as shares lost 8p to 740p.
The biggest Footsie risers were Royal Bank of Scotland up 11.7p to 264.7p, International Consolidated Airlines Group up 4.9p to 154.8p, Barclays ahead 5.75p to 213.5p and British American Tobacco up 57.5p to 3182p.
The biggest Footsie fallers were Burberry down 287p to 1088p, Kingfisher down 9.4p to 272.3p, Fresnillo off 49p to 1707p and Ashmore Group down 8.7p to 331p.
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