The London market climbed higher, led by bid speculation at drug firm Shire, as traders bet that a hike in US interest rates will not come until well into next year.

This week a stream of weak inflation data in the US, the UK and the eurozone fuelled concerns that the US Federal Reserve will be forced to wait until deep into 2016 before hiking interest rates. Cheap cash tends to favour investors buying shares.

The FTSE 100 Index was up 39.4 points to 6378, as Tesco rose strongly as traders digested the supermarket's sale of 14 development sites in its drive to cut costs.

Germany's DAX was up 0.4 per cent, while France's Cac 40 was up 0.6 per cent. In New York the Dow Jones Industrial Average was up 33 points in early trading.

The pound was slightly down against the US dollar at just over 1.54, despite official data showing that US manufacturing output fell 0.1 per cent, its second monthly fall in a row. Sterling was flat against the euro at just under 1.36.

Tesco was up 4.8p to 197p, following Thursday's announcement that it had sold off development sites it no longer planned to build shops on for a total of £250m.

It said the sites would be suitable for mixed-use and residential development and "marks further progress against Tesco's strategic priority of protecting and strengthening its balance sheet".

Shire was the top riser on the main market up 3.1 per cent, or 136p to 4511p, amid speculation that it was looking to take over US rival Radius Health.

Miner Glencore fell almost two per cent, or 1.8p to 116p, after being the strongest riser in the top flight for much of the session.

The under-pressure commodities firm has seen its stock price swing wildly, amid a recent pledge to investors to make disposals, and cut its £20 billion debt mountain by a third.

Vodafone was also up 2.2p to 209.3p, after it agreed to expand its existing deal with Russian-owned rival MTS Ukraine to offer 3G and other new services in the country.

The UK mobile phone giant said MTS Ukraine has 20 million customers, and the new deal will see it sell 3G and other new services in the region.

Drugmaker AstraZeneca rose 25p to 4146p, despite US Food and Drug Administration (FDA) saying it will require more data on the fixed-dose combination of its saxagliptin and dapagliflozin diabetes treatments before making a decision on their approval.

The Anglo-Swiss drugs giant said it would continue to work closely with the FDA.

Burberry fell for a second day in a row, after yesterday revealing falling sales amid a slide in demand for luxury goods sparked by the economic slowdown in China.

Shares were two per cent lower, or 25p to 1277p, on the back of a 12% fall yesterday.

The biggest risers in the FTSE 100 Index were Shire up 136p at 4511p, Tesco up 4.8p at 197p, Prudential up 36.5p at 1523p and Capita up 26p at 1264p.

The biggest fallers in the FTSE 100 Index were GKN down 10.2p at 270.3p, Burberry down 25p at 1277p, TUI down 21p at 1210p and Rolls-Royce down 11.5p at 685.5p.