The FTSE 100 share index has jumped 1 per cent as investors react positively to the weekend capture of former Iraqi President Saddam Hussein.
Food retailer William Morrison added to the upbeat tone as it launched an agreed £3 billion sterling takeover for rival Safeway. Safeway shares rose 2.3 per cent to 290p, above the 283p per share level of the bid, while Morrison shares rose 3.1 per cent.
At 8.30 a.m. the FTSE 100 was up 40.4 points at 4,388.0, to build on Friday's 16-point advance and taking the index back towards last month's peak of 4,423.6, its highest level of the year.
Dealers said Saddam's capture had soothed worries that U.S.-led forces were getting bogged down and should lower the uncertainty and cost of occupying Iraq.
However, news that two car bombs exploded in Baghdad early on Monday, sapped sentiment.
They said the main impact of Saddam's capture was a boost to sentiment. U.S. stock index futures rallied on news of Saddam's capture and the Dow Jones industrial average was set to open about 130 points above Friday's close of 10,042 points.