Britain's FTSE 100 closed at its highest level in six months on Thursday, led by mining stocks, which benefited from record high nickel and lead prices, with copper steady. Financial stocks also performed well as bid talk again resurfaced, traders said.
"The FTSE is now testing the 6,100 level, and Wall Street has opened in a similarly upbeat mood," said Jimmy Yates, a trader at CMC Markets. "It's been a relatively quiet week for UK economic and corporate news, with the recent run of M&A speculation also slowing somewhat, but the debate is wide open as to how the Bank of England will handle interest rates now." The FTSE 100 closed up 47.8 points, or 0.8 percent, at 6,121.3, its highest level since April 2006.
Mining stocks all performed well, with Rio Tinto climbing 3.5 percent, Vedanta up 3.1 percent, and Anglo American and Kazakhmys both adding around 2.6 percent.
"Mining is a sector that is very sensitive to the business cycle, so if global growth isn't slowing sharply, it will tend to help that sector," said analyst Robert Parkes at HSBC.
"The market's got a fair amount of momentum behind it at the moments, so there's no reason to suggest it's going to turn around quickly." Barclays climbed 1.7 percent, while Lloyds TSB and Royal Bank of Scotland both added about 0.8 percent.
Bradford and Bingley also rose 2.6 percent, and insurer Standard Life was up 3.2 percent.
British Airways was among the gainers, too, climbing 2.9 percent after it said it was prepared to inject more cash into its pension scheme as it seeks to strike a deal with unions over tackling its pension deficit.
It also benefited from low US crude prices, which fell to their lowest level this year at around $57 a barrel, as traders waited for Opec to thrash out details of an output cut and the market anticipated another rise in already high US crude inventories.Despite the low oil prices, BP was up 0.7 percent, and Royal Dutch Shell up 0.5 percent.
Oil explorer Cairn Energy ended down 2.8 percent, but recovered from earlier losses of 6.5 percent, as traders and analysts were left disappointed at the size of its planned Indian IPO. The Edinburgh-based firm said on Thursday it would be offering around 538 million shares in the new Cairn India arm and that it would still own a majority 69.5 percent stake in the company when the placing was complete.
Among other standout decliners, Drax fell 2.5 percent on the weaker oil price and after Goldman Sachs cut the price target. British Energy and Scottish Power SPW.L was unchanged after Rabo cut the stock from hold to reduce, saying the current share price more than reflected a possible take-over premium.
"The stock looks over-cooked after the Tata news came out, and each new day sees it give up a few of those gains," a trader said. Sources said on Monday that Corus had held talks with India's Tata Steel, but Corus had yet to receive a firm bid proposal. In media, ITV rose 1.2 percent after media executive Roger Parry said late on Wednesday he did not intend to launch a take-over bid for Britain's largest commercial broadcaster.
Shares in SABMiller fell 0.3 percent, losing early gains after the global brewing giant said on Thursday its first-half underlying beer volumes rose more than expected, but it suffered from a slowdown in South Africa and continued problems at Miller. WestLB cut the stock to "hold" from "add". Among midcaps, Carphone Warehouse shares fell 13.9 percent after it lost a deal to sell mobile phone contracts for Vodafone.
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