The FTSE 100 index of leading shares rose to a two-and-a-half week high yesterday as Northern Rock kicked off the banks' reporting season with an upbeat outlook.
The mortgage lender was the day's biggest gainer after strong first-half results led it to increase its forecast for growth in annual profits to 20% from 15%. Shares closed up 81.5p at £11.28.
Reuters, up 19.25p at 396.75p, also raised its earnings forecasts after similarly strong first-half figures that heralded the company's first increased dividend payment for half a decade.
Those gains helped lift the FTSE 100 by 25.9 points to 5,877.1, the highest close since July 10.
One main loser among the top shares was GlaxoSmithKline. Weaker-than- expected second-quarter results pushed shares in the drugs company down 23p to £15.07, while ITV dropped 2.25p to 98.5p on continued uncertainty over the future of chief executive Charles Allen.
Among the midcap stocks, Britain's burgeoning technology sector received a boost with strong results from FTSE 250 components Wolfson Microelectronics, CSR and Autonomy.
Shares in Wolfson Microelectronics added 10p to 419p after the designer of chips used by Apple for its iPod announced a 141% rise in interim profits to £11.5m and predicted that revenues in the next three months will be around $55m-$60m (£29.8m-£32.5m), compared with $41.5m in the same period last year.
The positive mood was tempered, however, by news that chief technical officer Jim Reid is leaving the business after a remarkable 21 years.
CSR, which makes bluetooth chipsets for laptops and mobile phone headsets, saw its shares gain 42p to £11.35 after announcing a more than doubling of first-half profits to $69m. Search software group Autonomy, meanwhile, gained 6p to 415p as the company announced record profits and revenues.
Cambridge-based Autonomy, whose technology was famously based on the mathematical theories of the 18th-century cleric Thomas Bayes, reported first-half profits of $28m, up from $8m, as revenues increased to $117m from $39m.
Analysts at Cazenove reiterated their outperform recommendation on the stock, adding that the good performance can be attributed to success in selling Autonomy's products to clients of Verity, the US rival that Autonomy bought in November, and strong underlying growth as "information management issues become centre stage" within many companies.
Merrill Lynch, meanwhile, said second-quarter revenues of $61m were better than the firm's recent guidance and the broker expects to increase its forecasts.
Colt Telecom was one of the biggest second-line gainers, up 6.75p at 127.75p, as Goldman Sachs moved its recommendation on the business communications company to neutral from sell. Soco International was not far behind, up 56p at £12.94, after Merrill Lynch initiated coverage of the stock with a buy rating and £15 share-price target.
The broker reckons reserve estimates are likely to increase "materially" and the Vietnam-focused oil exploration firm is a sure-fire takeover target, especially as its management previously ran Superior Oil and Conquest Exploration, both of which were taken out.
Computacenter was the biggest loser in the FTSE 250, down 18.75p at 230p, as Deutsche Bank moved its recommendation to sell from hold and dropped its share-price target by 40p to 220p.
Down among the smaller stocks, Acambis lost 23.5p to 153.5p after the vaccine maker admitted its hoped for contract to supply the US government with a weaker version of its smallpox jab has been delayed.
The government wants to complete clinical trials and the regulatory process before its starts stockpiling the vaccine, intended for elderly people and those with a weakened immune system. The contract is unlikely to be awarded until the end of the year or start of next and the roll-out will be slower.
On Aim, there were gains for two companies in the fast-growing market for security systems. Image Scan Holdings, whose scanners are used in the Kremlin, gained 7.25% to 18.5p after it announced a new contract worth £0.7m for technology allowing factories to inspect goods along the production line. Word in the market is the firm is set for an even bigger contract in coming weeks.
Meanwhile Hong Kong-based surveillance system designer UniVision Engineering rose 22% to 2.75p after it announced a jump in profits and improving order books.
Back among the FTSE 250 stocks, Rightmove gained 2.5% to 292p after the online estate agent said it was dropping plans to spend any more money on creating new Home Information Packs.
Property companies that backed the government's plans to introduce HIPs were punished by the market last week after ministers abandoned a central element of the scheme.
Rightmove had planned to invest £22m developing its packs, of which around £7m has already been spent. Exit costs are not expected to exceed £1.2m, it said yesterday.
Value bets
Shares in US-focused online gambling firms were boosted yesterday as investors lapped up reports that a bill seeking to block most forms of internet gaming is likely to be delayed and may fail altogether.
PartyGaming rose 3%, 888 was up more than 8% and Sportingbet rose almost 7% after suggestions that the bill is unlikely to win US Senate passage before a month-long recess begins at the end of next week and reports of infighting among the legislation's backers fanned hopes it could fall through.
There is only a short legislative window after the summer recess for the bill to be rushed through before mid-term elections in November. Opponents of the bill have maintained it would be near impossible to enforce.