The blue-chip FTSE 100 index inched up 0.2%, helped by financial stocks which gained 1.6% with Prudential, Legal and General, and Barclays among the top boosts to the index.
Insurer and asset manager Legal & General gained 3.2% and was the third biggest gainer on the FTSE 100 after beating estimates for first-half profit and signalling a strong full year.
Taylor Wimpey added 2.2% as it joined bigger rivals in forecasting sustained demand and projected annual operating profit above the top end of market consensus.
"Higher selling prices, strong forward sales and a rapid recovery in profits at housebuilder Taylor Wimpey in the first half will all help to soothe investors' nerves over what may happen to the UK housing market, as a new "Help to Buy" scheme starts and the stamp duty holiday comes to an end," said Russ Mould, investment director at AJ Bell.
Homebuilders have gained nearly 1% this year on higher demand for homes amid lockdowns and government tax breaks, although a survey last month pointed towards a cooling housing market.
The FTSE 100 began the month on a strong note and recorded gains for the third straight session, supported by robust earnings and dividend cheer, as investors straddle the fence between inflation concerns and re-opening optimism.
The domestically focused mid-cap index inched 0.1% higher, with travel and real estate stocks leading the gains.
Among other stocks, British e-commerce company The Hut Group rose 1.4% after it said it would buy UK-based online beauty retailer Cult Beauty for 275 million pounds ($382.91 million).
Rolls-Royce gained 1.4% as a Spanish newspaper report said the company is set to sell its Spain-based ITP Aero unit to U.S. private equity firm Bain Capital and Spanish group Sener for 1.6 billion euros ($1.9 billion).
(Reporting by Shashank Nayar and Amal S in Bengaluru; Editing by Kirsten Donovan, Subhranshu Sahu and Uttaresh.V)
By Shashank Nayar and Amal S