The FTSE had risen 48.9 points to 5909.7 by 13:00 BST (12.00GMT) in thin trading conditions.

A strong overnight performance on Wall Street buoyed up stockmarkets around Europe. Although yesterday's shock quarter point hike in UK interest rates meant the reaction in London was more subdued than elsewhere.

Traders were eagerly awaiting the latest US payrolls report, out at 1330 BST which will American data will be scoured for any hint that the Fed might tighten monetary policy this summer.

Dealers reported some switching from engineering stocks in the wake oft the rise in interest rates which could have another damaging knock on effect on the manufacturing industry.

The pound held up at around 2.90DM this morning amid fears that it could start to rise sharply again.

Ralitrack was among the biggest risers, advancing just under 5% as the market reacted favourably to the deal it has struck with the government to help finance the Channel tunnel rail link.

Boots was another strong performer after it unveiled a good set of results yesterday, with its Advantage Card proving popular with customers.

Drug stocks including Zeneca and SmithKline Beecham continued to rally on merger speculation following news that Astra, the Swedish drugs giant, is attempting to untangle itself from a US joint venture with Merck.