Marks & Spencer, which rose 14 per cent this week, may gain more before reporting first-half profits.
"With all the indicators showing growth and the likelihood that interest rates are headed higher, we think stocks that are going to benefit from economic expansion are the best place to be," said Tim Bray, who helps manage about $1bn of European stocks at Union WorldInvest.
Mr Bray said he was focusing on engineering companies, citing Electrocomponents and IMI, the world's largest maker of drinks dispensers. Electrocomponents has gained 30 per cent this year while IMI has risen 29 per cent.
The FT-SE 100 index slipped 8.7 points to 6,375.2 on Friday, though for the week it rose 3.1 per cent. Phone stocks led gains, sending the FT- SE telecommunications services index 8.6 per cent higher as a series of reports across Europe showed mobile phone sales are growing. Vodafone AirTouch, the world's biggest cellphone operator, soared 12 per cent, buoyed by spec- ulation it will expand further in the US via a joint venture with Bell Atlantic.
Fresh evidence of the UK's rate of economic expansion will be available when the Halifax, the UK's biggest mortgage lender, releases its monthly report on British house prices on Thursday.
UK bonds may decline in the coming days as evidence of soaring house prices fuels concern that the Bank of England will consider raising its benchmark interest rate before the year end.
"There will probably be more evidence of upward pressure on house prices," said Ken Wattret, senior economist at Paribas Capital Markets. "It quite possibly could trigger a further sell-off in gilts.
"The one inflation-warning light is coming from the housing market."
The benchmark 10-year bond rose 0.28 per cent in the week to 105.79, driving its yield down four basis points to 5.14 per cent. The 30-year yield fell 15 basis points to 4.56 per cent.
Yields on shorter-dated securities, which are typically more sensitive to the central bank-rate outlook, climbed in the week. Yields on two-year notes rose six basis points to 5.71 per cent, while five-year yields rose six basis points to 5.64 per cent.Reuse content