The index ended 50.3 points higher at 6,105.5 - just 0.3 below its high. Supporting shares were also in form.
MFI Furniture led the takeover candidates, gaining 9p to 95p in busy trading. A 145p strike from Kingfisher was the popular guess.
The shares touched 160p last year. They have been in ragged retreat since disappointing sales figures were announced last month. One big institutional seller was cleared this week, coinciding with the outbreak of takeover gossip.
On the financial pitch the spotlight was directed at fund managers Perpetual and M&G. Halifax, of course, and insurance group Royal & Sun Alliance were put forward as potential predators; so was an array of overseas groups, including Goldman Sachs.
Standard Chartered added 28p to 972p and HSBC, where rumours of a major deal erupted in the Far East this week, put on 30p to 1,982p.
Simon Willis and Karl Green at Charterhouse Tilney describe Standard as an obvious bid target and say: "Even the pipe dream of a merger between HSBC and Lloyds TSB should not be entirely dismissed".
Prudential Corporation, 24.5p higher at 947.5p, would, they say, be a good fit for any leading bank.
Securicor, the security group, advanced 13p to 419p. Stories resurfaced that it is on the verge of clinching a deal to sell its 40 per cent interest in the Cellnet mobile telephone group to the major shareholder, BT, firm at 660p. There was even talk of a strike, presumably from BT.
Allied Domecq, the drinks group, was another back in the corporate arena. A management buyout for its pubs spread was the story. A figure of pounds 2.2bn was bandied about.
Rumours that Allied, up 11p to a 632p four-year high, planned to split into two, possibly merging its spirits division with one of its rivals and becoming a stand-alone retailer (pubs and various franchise concepts) have also gone the rounds. There was also speculative interest in Highland Distilleries, the Famous Grouse Scotch whisky group which is closely related to Remy Cointreau of France.
Encouraging sales figures from the John Lewis Partnership helped selected retailers. Debenhams put on 16.5p to 367.5p and Marks & Spencer 8.5p to 590p. Asda continued to draw support from Morgan Stanley, gaining a further 8p to 218p.
Great Universal Stores hardened 16p to 795p while target Argos was little changed at 638p.
It was still a relegation-like struggle among the sports retailers, particularly JJB Sports which, it appears, has attracted the attention of bear raider Simon Cawkwell, aka Evil Knievil. He claimed to have started shorting the shares last month. They fell a further 46p to 536p (after 521.5p). The price was 822.5p last month. Blacks Leisure, leader of the sports retailing boom, fell 10p to 382.5p.
BTR improved 10.75p to 206.25p; it restated its intention to hand out pounds 2bn to shareholders. The first pounds 1.5bn will be returned in the first half of this year; the rest next year. Already nearly 8 million shares have been bought at 198.8p.
British Airways headed the list of blue chip fallers. The shares dived 22p to 614.5p on worries about the American Airlines link and cautious comments from Salomon Smith Barney.
PizzaExpress shaded to 796.5p after Janus, the US fund manager which has developed a taste for the stock, revealed it had sold 1.1 million shares, cutting its stake to just over 10 per cent.
Orbis, the security group, moved ahead to 54p, a two-day gain of 6p. Butterfield, the stockbroker, is keen on the shares.
Lopex, the advertising and marketing group, held at 43.5p as rival Incepta disclosed it had for the second time this week lifted its stake and now has 19.41 per cent. The two held takeover talks last year.
Rosebys, the household textiles retailer with 450 outlets, held at 285p. Robert Fleming Securities put out a buy recommendation.
Internet Technology put added 6.5p to 65p on the SG Securities profit estimates, and British Thornton, into computer point-of-sale materials after a reverse takeover, put on 6p to 36.5p. The shares returned from suspension this week. The deal was struck at 20p a share.
Integrated Asset Management, the fledgling financial group suspended last year at 130p, has attracted new 29.9 per cent shareholders, John Booth and Emanuel Arbib, who are acquiring shares from Ferdinand Lips and the Swiss bank he runs.