Blue chips have slipped off early highs after being hit by a 5 per cent drop for defence firm BAE Systems on talk of a share placing.
But Safeway has risen after a fifth potential bidder emerged for the group.
The FTSE 100 index of leading shares was up 10.7 points, or 0.3 per cent, at 3,831.3 by mid-morning, recouping some of its 3.9 per cent fall over the past week but off a session high of 3,853.4 points.
Aerospace and defence firm BAE Systems was the biggest blue-chip faller, down 5 per cent at 119 pence. Traders cited talk that a placing of 50 million to 60 million shares may be about to hit the market, but BAE played down the reports as speculation.
The gainers list was led by a 3.9 per cent jump for supermarket chain Safeway after British retail tycoon Philip Green said he was considering a cash bid for the group, making him the fifth potential buyer.
Other companies to show an interest in Safeway include the world's largest retailer, Wal-Mart, and rival grocery group Sainsbury, but so far the only firm offer on the table is from William Morrison Supermarkets.
Insurance stocks also rose ahead of the release of several sets of new business figures later in the week. Aviva was 2 per cent better, Prudential was up 1.6 per cent and Legal & General added 1.2 per cent.
Home improvement and electrical goods retailer Kingfisher jumped 2.3 per cent after investment bank Schroder Salomon Smith Barney said it had upgraded its rating on the group to "outperform".