Shares in Tesco rose 4.9% to 186.7p, helping the FTSE 100 add nine points to 7,424 points. Booker was meanwhile among the risers on the FTSE 250, up 5% at 208.6p.
The Competition and Markets Authority (CMA) said it founded that the merger between Tesco and Booker, a wholesaler which supplies the Premier, Londis and Budgens convenience stores, would not threaten competition.
'Our investigation has found that existing competition is sufficiently strong in both the wholesale and retail grocery sectors to ensure that the merger between Tesco and Booker will not lead to higher prices or a reduced service for supermarket and convenience shoppers,' said Simon Polito, chair of the inquiry group.
The CMA will now take more evidence before making a final decision by the end of December.
'The competition regulator can expect a postbag full of angry letters from convenience shop owners before it comes to a final decision next month,' said Laith Khalaf, senior analyst at Hargreaves Lansdown.
Even if Tesco wins final approval from the CMA, the supermarket may find it challenging to convince shareholders of the deal.
Schroders and Artisan Partners, the group's third and fourth largest shareholders, in March called on the supermarket to drop the plans.
'It remains to be seen if there's a silent majority out there who will give the deal the nod, or whether the vocal critics of the proposals are reflective of wider discontent amongst the ranks of Tesco investors,' said Laith Khalaf, senior analyst at Hargreaves Lansdown.
Joining Tesco at the top of the FTSE 100 was Vodafone (VOD), up 5% at 226.7p after the mobile phone operator hikes its forecast for full-year earnings growth.
'Even adjusting for one-offs, underlying trends were ahead and we expect the shares to push notably higher,' said Polo Tang, analyst at UBS.
'Almost every geography was notably ahead versus consensus for second quarter organic service revenue growth, particularly Germany that saw a better performance in mobile and Spain benefiting from "more for more" price increases.'
ITV (ITV) meanwhile slumped to the bottom of the index, down 5.4% at 145.7p after posting a 1% drop in third quarter sales.
On the FTSE 250, shares in Intermediate Capital Group (ICG) jumped 8% to £10.04 after the specialist asset manager reported record inflows and a 14% rise in assets.
Computacenter (CCC) was up 7.5% at £10.62 after the IT services company said full-year results would be 'comfortably in excess of its previous expectations'.
McCarthy & Stone (MCS) surged 6.4% to 156.6p as the retirement house builder reported a positive outlook.