The FTSE 100 edged higher in cautious early trade today, bouncing from Friday's 27-month low. Mining business Billiton jumped on merger news and banking group HSBC recovered from recent lows.
The blue chip index was up 39.3 points or 0.3 per cent at 5,602.1 by 08.28 a.m. with gainers in a near three to one majority.
Billiton jumped 48-3/4 pence or 16.8 per cent after agreeing a $28 billion merger with Australia's BHP to create with world's second biggest minerals and metals giant.
This has sparked talk of a possible counter bid from Anglo American for the UK firm.
With HSBC bouncing 3.1 per cent from Friday's eight-month closing low those two delivered some 15 points of upside to the flagging FTSE 100. Last week it tumbled around 350 points amid concerns over Wall Street losses and the impact of a US economic slowdown.
Dealers said hopes were still pinned on the US Federal Reserve whose policy-setting committee meets tomorrow to consider a cut in interest rates.
Key support for the blue chip UK index remains at around last week's intraday low of 5,471.
Some analysts said a drop to 5,000 could be on the cards if the index fails to stabilise at current levels.
Outside the FTSE 100 early features included fund manager Aberdeen Asset Management up 4.5 per cent after a newspaper report it had been approached by predators.