The FTSE 100 inched higher as a raft of London stocks were buoyed by takeover deals and speculation.
The City’s multinationals also benefited from a weaker session for the pound.
London’s top index finished 6.47 points, or 0.08%, higher to end the day at 8,281.22.
Meanwhile, the FTSE 250 had a sharper rise as it was buoyed by takeover activity.
Direct Line soared by 41.4% after it rebuffed a £3.3 billion approach from rival Aviva.
Aviva announced after the market closed on Wednesday that it had put forward a possible cash-and-shares bid – worth 250p a share – to buy Direct Line last week, but saw the move rejected.
The approach helped spark a jump in the value of Direct Line and other insurance firms, but caused Aviva shares to slip by 2%.
Chris Beauchamp, chief market analyst at IG, said: “The prospect of more M&A activity in the insurance sector has failed to spark a substantial rally for the FTSE 100, but in the short term the upside for the index looks limited given the near-300 point gain in two weeks.
“Aviva’s bid for Direct Line might signal the beginning of a more activist phase for undervalued UK stocks, helped along by the renewed weakness in sterling versus the dollar.”
Elsewhere, fellow FTSE 250 firm Renewi saw shares rocket after it agreed to a takeover deal.
In Europe, the other main indexes rebounded despite concerns over volatility in the French economy. Activity also benefited from the closure of the US markets for Thanksgiving.
The Cac 40 ended 0.51% higher for the day and the Dax index was up 0.84%.
Meanwhile, sterling dipped versus the dollar after traders chose to sell on the back of a strong session on Wednesday.
The pound was down 0.05% at 1.268 US dollars and up 0.22% at 1.202 euros.
In company news, Loungers shares also surged higher after it agreed to be bought by a US investment group in a deal which values it at about £338 million.
Fortress Investment Group said it made an offer for the UK hospitality group, which operates the Lounge, Cosy Club and Brightside brands, through a newly formed investment vehicle.
Loungers shares were 27.7% higher at 204p as a result.
Waste management group Renewi was one of the day’s top risers after striking a £700 million takeover deal by Australian asset management firm Macquarie.
The two companies said they have agreed an 870p-per-share deal after a previous 810p move had been rejected.
Renewi was 46.7% higher at 813p at the close.
Dr Martens shares were up 10.6% at 64.6p after the boot maker said its turnaround actions were starting to bear fruit, despite the retail business swinging to a £28.7 million loss for the past half-year.
The price of oil was broadly steady as recent selling pressure on crude eased back.
A barrel of Brent crude oil was up by 0.12% to 72.39 dollars (£57.06) as markets were closing in London.
The biggest risers on the FTSE 100 were Spirax, up 260p to 7,160p, Sainsbury’s, up 7.8p to 261.2p, Admiral Group, up 75p to 2,539p, easyJet, up 14.2p to 552.4p, and Entain, up 19.2p to 802.4p.
The biggest fallers on the FTSE 100 were Vistry, down 26p to 649p, Land Securities, down 16p to 606p, Imperial Brands, down 62p to 2,573p, Aviva, down 9.8p to 479.5p, and Frasers, down 14.5p to 738p.
