Blue-chip British shares closed sharply higher on Monday after oil major BP and mobile phone giant Vodafone announced share buyback moves.
BP gained 2.2 percent after it said it would hand extra cash back to shareholders over the next three years due to high oil prices and strong production growth. BP bought $1.25 billion of shares in the first quarter and plans to buy back more.
Vodafone closed up 1.4 percent after it said it bought 22 million of its own shares in the market last Friday, while other telecoms saw mobile rival mmO2 close 4.3 percent higher at 103-3/4 pence on continued talk of a bid at 125p a share.
The FTSE 100 index scored its second closing gain of more than one percent in the past three sessions, finishing 49.2 points or 1.1 percent higher at 4,406.7. It stands 115 points above last week's four-month low, which was prompted by security worries in the wake of the March 11 Madrid train bombings.
"We're coming back from oversold positions. The market has been fragile over the past week or so on security issues," said Henk Potts, strategist at Barclays Private Clients.
"The market's going to trade around these levels or maybe head back to 4,500 but it's going to be hard to see it break through those levels," he added.
Sharp gains on Wall Street as investors welcomed a dip in the price of oil added impetus to gains in the FTSE.
Defensive stocks, those shares, which are seen to be insulated from the economic cycle and which held up during the FTSE's recent 200-point slide, were left out of Monday's rally.
Drinks group Diageo finished 0.5 percent down, while United Utilities and household products company Reckitt Benckiser lost 0.8 percent and 0.4 percent each.
Telecoms were also in demand lower down the market, with mid-cap corporate telecoms provider Thus up three percent after saying it expected a maiden operating profit in the second half of 2004/05 as its recovery gathers pace and more companies sign up for its services.
Shares in health and beauty retailer Boots, which shocked investors on Friday with news of rising costs, took back some of Friday's near-13 percent drop by rising 1.8 percent despite a slew of broker downgrades.
Banks were higher, with sector consolidation again a strong theme after Swiss banking giant Credit Suisse said at the weekend there were six or seven possible partners with whom it could merge as a response to recent US mega-mergers. Lloyds TSB added two percent, while Standard Chartered climbed 1.8 percent.
Among the mid-caps South African IT firm Dimension Data rose 3.6 percent after a gain in the rand, while pubs group Mitchells & Butlers added 3.8 percent after Smith Barney started coverage of the firm with a "buy" recommendation.
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