Shortly after figures from the Office for National Statistics showed minimal year-on-year growth in earnings, the Bank of England predicted that wages will rise 1.25 per cent this year, rather than the 2.5 per cent previously thought.
This means pay will continue to lag behind inflation, giving policy makers another reason not to push up interest rates from the current 0.5 per cent.
The FTSE 100 Index was 24.3 points higher at 6656.7 as signs that low lending rates may continue lifted the likes of housebuilder Persimmon and lender Royal Bank of Scotland. However, the pound fell to a four-month low against the US dollar to below 1.68 amid signs that the first rate hike will now come in early 2015. Sterling was also down against the euro, at 1.25.
Global markets also continued to reflect ongoing geopolitical uncertainty as investors kept a watchful eye on developments in Ukraine and Iraq.
Housebuilders and lenders benefited from the latest projection for UK rates, with Royal Bank of Scotland up 6.4p to 348.4p, Persimmon 20p higher at 1296p and Redrow ahead 5.9p to 247.1p in the FTSE 250.
The calmer geopolitical situation helped Thomas Cook rise 4.3p to 123p and easyJet to lift by 2.5 per cent, up 32p to 1290p.
In corporate news, motor insurance stocks were under pressure after Elephant and Bell owner Admiral said it was still too early to call a turning point in the market after two years of falling premiums.
The company reported a two per cent rise in half-year profits to £184.9 million but shares fell more than five per cent or 79p to 1371p as Eamonn Flanagan, an insurance analyst at Shore Capital, kept his sell rating on the company due to regulatory uncertainty and household budget constraints.
Admiral was at the top of the FTSE 100 fallers board, while second tier rival Direct Line Insurance was down five per cent, off 15.3p to 281.1p.
Elsewhere, investors welcomed an encouraging update from outsourcing firm G4S after it posted profits for the first half of 2014 of £85 million, up from a £94 million loss for the same period the year before. It added that it hoped to grow its UK business by winning new government contracts, four months after a Whitehall ban was lifted. G4S shares led the top-flight leaderboard up 13.7p at 273.5p, while rival Serco fell 16.2p to 314.3p.
The biggest risers on the FTSE 100 Index were G4S up 13.7p at 273.5p, Coca-Cola HBC up 40p at 1328p and Barratt Developments up 9.6p at 350.8p. The biggest fallers were Admiral down 79p at 1371p, Rio Tinto down 91.5p at 3423.5p at 91.5p and Glencore down 9.5p at 365.5p.