The FTSE 100 Index closed 52.5 points higher at 6304.3

Record profits and a return to dividend payments from British Airways helped put the London market on the front foot.

Although the airline has contended with spiralling oil costs and the botched opening of Heathrow's Terminal 5, the stock was cheered 4% by profits of £883 million and the first shareholder payout since 2001.

The wider FTSE 100 Index closed 52.5 points higher at 6304.3, although the larger gains seen earlier in the session were tempered by early losses in US markets.

Wall Street wrestled with better than expected housing data but gloomy consumer confidence readings, while traders were also unsettled by oil reaching a new peak of almost 128 dollars a barrel.

BA's profits triggered bonuses for all staff except chief executive Willie Walsh. He will not be benefiting after he surrendered his payout due to the Terminal 5 issues. But shares in the carrier were among the Footsie's top risers, up 9p at 233p.

The airline was surpassed by British Energy, which gained more than 5% after it revealed it had received a range of proposals from several parties. Shares were 35.5p stronger at 715.5p, reversing losses seen in recent days amid fears that EDF would win the company with a proposal worth less than 700p a share.

Thomas Cook and TUI Travel shared in BA's recovery, with the travel firms ahead 7.5p at 263.25p and 4.75p at 253.75p respectively despite the high oil prices.

In the cheerful mood several retailers were also on stronger ground, with Next adding 46p to 1285p, and Argos owner Home Retail Group 8.25p up at 260.5p.

Marks & Spencer, which is due to publish results on Tuesday, lifted 13.25p to 415p, a rise of more than 3%.

Among the Footsie shares in negative territory, engine maker Rolls-Royce fell 10.75p to 439.25p after it was reported that Airbus was developing a biofuel that could power a third of the world's aircraft by 2030.