A JUMP in GKN shares helped buoy the FTSE 100 after the engineering giant agreed to a merger involving its automotive business in a move meant to stave off a hostile £7.4 billion takeover bid by Melrose.
London's blue chip index ended the day up 0.3 per cent or 21.27 points at 7,224.51 points, with GKN among the biggest risers, up 13.7p at 435.1p.
It comes amid news that specialist car part manufacturer Dana will pay $1.6 billion cash to GKN as part of a deal to combine with GKN's Driveline division, which booked £377 million in profit last year on revenues of £5.3bn.
Under terms of the agreement, Dana shareholders will own 52.75% of the company and GKN the remainder, with the combined company set to be domiciled in the UK as Dana - which will continue to trade on the New York Stock Exchange.
In currency markets, the pound was trading higher against the US dollar, up 0.3% at 1.385, and rose 0.3% versus the euro to 1.124 as investors digested a raft of data released by the Office for National Statistics on Friday.
Michael Hewson, chief market analyst at CMC Markets UK, said: "The pound has had a fairly decent week ahead of next week's spring statement, with the latest economic data pointing to a fairly decent rebound in economic activity in January.
However, he noted that "the data wasn't all good with the trade balance still showing little signs of improving."
Across Europe, the French Cac 40 closed higher by 0.4% while the German Dax ended the day in the red, down 0.07%.
Brent crude prices jumped 2% to around $65.22 per barrel as the commodity bounced back from two straight days of losses, buoyed by a weaker US dollar which made it cheaper for foreign buyers.
In UK stocks, BAE Systems rose 12.8p to 601.8p after the company moved a step closer to sealing a multi-billion pound contract to supply Typhoon fighter jets to Saudi Arabia.
Inmarsat tumbled 31.2p to 432.7p as the satellite company said it was cutting the annual dividend to 20p as it ramped up investments in its in-flight wifi services.
That is compared with the 53.96 cents proposed for its total dividend for 2016.
Troubled building supplies firm SIG fell 13.5p to 136.3p amid news that a number of employees will leave the business following disciplinary investigations relating to accounting irregularities and mis-stated profits.
It comes as SIG also unveiled its full-year results, which saw losses narrow to £51.2m but the firm warn over a precarious UK market.
Bargain Booze owner Conviviality plunged 15p to 108p, piling further pain on shares which fell nearly 60% a day earlier after warning on profits.
Investors were unmoved by news that chief executive Diana Hunter shelled out more than £50,000 for 44,000 shares on Friday, while finance chief Mark Moran bought a further 120,000 shares.
The biggest risers on the FTSE 100 were NMC Health up 152p to 3,514p, Ashtead Group up 65.5p to 2,010p, GKN up 13.7p at 435.1p, and Rentokil Initial up 8.1p at 272.4p.
The biggest fallers on the FTSE 100 were WPP down 26p to 1,204.5p, Paddy Power Betfair down 115p to 7,885p, Shire down 36p to 3,192.5p, and National Grid down 7.9p at 783.7p.
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