Sharecast - At 0835 BST, the FTSE 100 was up 0.2% at 7,889.78.
Investors were mulling a surprise interest rate hike from Australia's central bank, which lifted its key interest rate again and warned of more hikes to come as it battled to combat persistent inflation.
The Reserve Bank of Australia raised its cash rate by 25 basis points to 3.85% at its monthly meeting, against expectations of a second consecutive pause.
RAB governor Philip Lowe said inflation in Australia had "passed its peak, but at 7% is still too high and it will be some time yet before it is back in the target range".
"Given the importance of returning inflation to target within a reasonable timeframe, the board judged that a further increase in interest rates was warranted today."
"Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve."
On home shores, figures released by Nationwide showed that house prices edged higher in April following seven consecutive months of declines.
House prices ticked up 0.5% on the month following a 0.7% drop in March, to an average of £260,441. On the year, meanwhile, house prices fell 2.7% in April following a 3.1% fall the month before.
Nationwide chief economist Robert Gardner said that while annual house price growth remained negative, "there were tentative signs of a recovery" with the monthly uptick.
"April’s monthly increase follows seven consecutive declines and leaves prices 4% below their August 2022 peak," he noted.
"Recent Bank of England data suggests that housing market activity remained subdued in the opening months of 2023, with the number of mortgages approved for house purchase in February nearly 40% below the level prevailing a year ago, and around a third lower than pre-pandemic levels. However, in recent months industry data on mortgage applications point to signs of a pickup.
"This also chimes with the recent shifts in consumer sentiment. While confidence remains subdued by historic standards (as shown in the chart below), people’s views of their own financial position over the next twelve months, and general economic conditions in the year ahead, have both improved markedly in recent months. If inflation falls sharply in the second half of the year, as most analysts expect, this would likely further bolster sentiment, especially if labour market conditions remain strong."
He said that in turn, this would also be likely to support a modest recovery in housing market activity. However, any upturn is likely to remain "fairly pedestrian", as it will take time for household finances to recover, since average earnings have been failing to keep pace with inflation.
In equity markets, housebuilders the top gainers after the Rightmove data, with Persimmon (LON:PSN), Taylor Wimpey (LON:TW), Barratt, Berkeley, Vistry and Redrow (LON:RDW) all higher.
HSBC (LON:HSBA) rallied as it reinstated its dividend and announced a new round of share buybacks as it trebled first-quarter profits on the back of rising interest rates. The bank posted a pre-tax profit of $13bn for the three months to March against $4.2bn a year earlier and the $8.64bn average company-compiled analysts’ estimates.
It was also boosted by a reversal of a $2bn impairment HSBC took against the planned sale of its French business, reflecting the fact that the deal may no longer go through.
Matt Britzman, equity analyst at Hargreaves Lansdown (LON:HRGV), said: "HSBC has seen profits soar, and investors should be reasonably happy with the restored quarterly dividend and $2bn buyback that looks likely to be completed over the next quarter.
"Whether this is enough to quell the voices of those adamant that splitting HSBC up is the best course of action for investors remains to be seen, but certainly, one gripe had been the lack of returns given the strong capital position."
Ashtead (LON:AHT) gained after the equipment rental firm said it had started a share buyback of up to $500m.
Carnival (NYSE:CCL) and Tui also advanced, most likely on positive read-across from Norwegian Cruise Line, which on Monday lifted its annual profit forecast and posted better-than-expected first-quarter results.
Rightmove was boosted by an upgrade to ‘buy’ at HSBC.
On the downside, oil giant BP (LON:BP) fell despite reporting a better-than-expected first quarter profit of $5bn. The results beat analyst expectations of a $4.3bn quarterly profit. Underlying replacement cost profit, BP’s measure of net income, hit $4.96bn, up from $4.8bn in the final three months of 2022 and beating expectations of $4.3bn in a company-compiled survey of analysts.