Stronger oil shares pushed Britain's leading equities to a higher close on Tuesday as US crude prices touched 21-year highs, but financial shares were weak following results from Royal Bank of Scotland.
Oil giant Shell was a top gainer, up 2.6 percent, while BP and BG added around 2 percent each as oil topped $44 a barrel, causing some investors to reassess future values for oil shares.
"There's a lot of concern about the oil price, and people think it's unlikely to come back much no matter what. That means that peoples' forecasts are wrong, and so there has been a reappraisal of the oil shares," said a trader.
Oils accounted for 13 points of the FTSE-100's closing gain of 14.0 points to its high on the day of 4,429.7 The index is trying to re-establish itself in a 4,400-4,500 range after last week closing below 4,300.
Paul Kavanagh, head of market strategy at stockbrokers Killik, said he was encouraged by the way the market absorbed a turn in the US interest rate cycle, patchy economic news and a surge in energy prices.
"I don't think you can describe the market as either cheap or expensive at this point. I suspect that we're going to see a reasonable interim reporting season, therefore I'm minded to think we've got a reasonable quarter in front of us," he said.
Royal Bank of Scotland was the top FTSE loser, down 3.1 percent at 1,510 pence after it announced earnings that were broadly in line with forecasts but disappointed some investors' hopes that the numbers would follow the recent better-than expected trend set by rivals HBOS and HSBC.
"It is a bit overdone. They were good figures but not as great as the other two. There's just a bit too much stock floating around today but I would have thought at some stage, whether it's tomorrow or the day after they'll be back above 1,540p," said one market maker.
Among other financials, insurer Prudential fell 1.2 percent after it abandoned the sale of its 79 percent-owned Egg Internet bank. Egg, which has been up for sale since January, plunged 27.8 percent.
"The gap between what Prudential was prepared to accept and what people were prepared to pay was so big, it wasn't just a small amount, so I suspect we might not see a deal for a while," said one trader.
Other companies reporting included brewer Scottish & Newcastle, which rose 2.7 percent after predicting it would meet full-year targets and announced an as-expected 8 percent rise in underlying first-half profit.
But investors were less keen on industrial gases firm BOC, whose shares lost 2.1 percent despite higher third-quarter profits. Traders said the main concern was the outlook for its semiconductor division, BOC Edwards.
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