Sterling's weakness and strong economic data boost FTSE 100 Index
London's premier index fell just short of a new record as sterling's weakness and robust UK economic data gave a lift to blue-chip stocks.
The FTSE 100 Index closed up 23.82 points at 7,543.77 but came in shy of the record all-time closing high of 7,547.63 achieved on May 26.
The top flight rebounded on Thursday as the pound suffered a tumultuous session on the currency markets as the latest polling data from YouGov put the Conservatives just three points ahead of Labour.
Blue-chip companies, which report in US dollars or euros, get a lift on the FTSE 100 Index when the pound struggles because their earnings benefit from a more favourable currency translation.
However, sterling made a resurgence later in the session - trimming back gains on the FTSE 100 - as traders became more confident that the Tories will return to power after June 8.
The pound was up 0.2% versus the US dollar at 1.289 and 0.5% higher against the euro at 1.150.
Connor Campbell, financial analyst at Spreadex, said election jitters had eased in the afternoon as traders reassessed the election data from the polls.
He said: "It appears that, while the morning's YouGov poll puts the Tories just three points ahead of Labour, there are enough surveys giving Theresa May and co a larger lead to allay the currency's fears of anything but a Conservative landslide.
"This meant some juice was sucked out of the FTSE, its gains roughly halving to 0.2% as the day went on."
The London market was also given a boost from the latest manufacturing data showing a strong performance from the industry, despite widespread fears of a prolonged slowdown in the UK economy.
Output in Britain's manufacturing industry eased back from a three-year high, but beat expectations in May thanks to robust growth in new orders.
The closely watched Markit/CIPS UK Manufacturing purchasing managers' index (PMI) showed a reading of 56.7 last month, down from 57.3 in April and above economists' expectations of 56.5. A reading above 50 indicates growth.
Across Europe, Germany's Dax was up 0.4% and the Cac 40 in France was 0.7% higher.
The price of oil pared gains during the session, but bounced back from a slump on Wednesday to rise by 1.1% - or 54 cents - to 51.30 US dollars a barrel.
Traders remain sceptical about the potency of Opec's production cuts and the likelihood of it reducing overall supply in the market.
In UK stocks, Lloyds Banking Group fell despite gaining regulatory approval for its £1.9 billion acquisition of consumer credit card business MBNA from Bank of America.
The banking giant said MBNA, which holds assets of £7 billion, would deliver strong financial returns and bolster its position in the UK prime credit card market. Shares closed down 0.43p at 70.2p.
Away from the top tier, Transport giant FirstGroup was the biggest faller on the FTSE 250 after warning of ongoing economic uncertainty in the UK.
However, the firm saw underlying pre-tax profits rise 23% to £207 million thanks to a stronger performance in its First Student school bus operation in North America, which is now the group's largest division.
Shares were down 5% or 7.5p to 142.3p.
The biggest risers on the FTSE 100 Index were Paddy Power Betfair up 350p to 8,420p, 3I Group up 32p to 927p, Convatec Group up 10.8p to 330.8p, Micro Focus International up 66p to 2,460p.
The biggest fallers on the FTSE 100 Index were Taylor Wimpey down 13.1p to 190p, National Grid down 39.5p to 1,050p, Mediclinic International down 27.5p to 781p, ITV down 4.1p to 191.6p.