The UK's FTSE 100 index rose firmly into positive territory in early trade on Monday, boosted by the Dow's 167-point gain on Friday.

In the midst of thin trading, the FTSE moved 31 points ahead to 5,978.3 as the recent surge of volatility in the Far East subsided overnight.

The banking sector also helped provide an early lift following expectations of a mega-merger announcement in the US later today.

Lloyds TSB gained 7p to 902p, Barclays improved 14p to £16.90, Halifax soared 16p to 873p and Abbey National shifted 15p higher to £10.95.

However, NatWest, which has been tipped in the past to merge with Barclays, was unmoved at £11 and the Woolwich was unchanged at 335.25p.

Meanwhile, Fat East linked stocks were mixed with HSBC an even £15.98, while Standard Chartered gained 1.5p to 712.5p.

Reckitt & Colman soared 47p to £12.30 and Smiths Industries firmed 3p to 961p.

Elsewhere, pharmaceuticals were largely resuming their advance with SmithKline Beecham heading 14.5p north to 683p and Glaxo Wellcome picking up 22p to £16.98.

Zeneca, however, remained level-pegged at £26.28, while healthcare group Nycomed Amersham mustered 20p stronger to £20.10.

Dairy food giant Unigate, up 6p to 664.5p, disclosed it would continue to look for a new takeover target after its £1.6bn talks collapsed with food and furnishings conglomerate Hillsdown, up 1.5p to 181.5p.

Unigate's lift in profits but drop in turnover over the fall in the high price of pigmeat and plunge in the cost of milk failed to have a major impact on its rivals.

Northern Foods and United Biscuits remained level-pegged at 235p and 272p respectively, while Dalgety strengthened a modest 1.5p to 412.5p.

And high-street bookseller WH Smith moved to fend off the threat from on-line retailing by snapping up Europe's biggest internet book retailer.

WH Smith, which eased ½p to 556p, is paying £8.8m for bookshop.co.uk Plc, parent company of The Internet Bookshop which offers 1.4m books for sale to customers on the internet across the world.