Britain's FTSE 100 index rose 0.7 percent on Wednesday as British Energy, banks and miners led a partial recovery from Tuesday's biggest one-day fall in 17 sessions.
British Energy rose 5.3 percent as some brokers told investors Monday's slide, following its shutdown of nuclear reactors due to cracked pipes, was overdone and reduced their price targets to levels still above the market price, traders said.
"Less professional investors sold on the outages as a knee-jerk reaction, because they don't understand the fundamentals, and market makers rushed to mark down the price, which has since brought in buyers," a trader said.
The FTSE 100 rose 41.8 points to 6,150.4, benefiting from US inflation data which indicated the Fed was unlikely to cut rates, strategists said. The index fell 63.8 points on Tuesday.
"The US data and the prospects for a stronger US economy gave the index a boost," said David Page, an economist at Investec. The Bank of England minutes earlier showed that two members of the Monetary Policy Committee had voted for an immediate hike when the Committee left rates on hold in October.
"This should have been FTSE-negative, but the big jump in jobless benefit claims outweighed the hawkish element of the minutes and relieved some of the pressure," said Page.
The number of people claiming jobless benefits jumped 10,200 in September, the strongest increase since March, and compared with forecasts for an unchanged reading. Banks gained as the BoE minutes cemented expectations of a November rate hike and due to renewed bid talk, particularly around Lloyd's TSB, which rose 0.8 percent, traders said.
Bid talk also lifted Corus 1.7 percent after a press report that Brazilian steelmaker Companhia Siderurgica Nacional was considering a bid to rival the 455 pence a share in cash proposed by India's Tata Steel on Tuesday.
Most metal prices were firm, and miners gained. Rio Tinto rose 3.2 percent on news it is to acquire a nearly 10 percent stake in Invanhoe Mines. "Miners are the ones with the ignition key as well as the petrol and have been leading people to the FTSE 100 where they have also been buying other stocks," a trader said.
Hedge fund company Man Group rose 4.6 percent on positive talk about the demerger of its brokerage, Man Financial and Amvescap rose 3.3 percent on related sentiment, traders said.
Hanson rose 2.7 percent on renewed bid talk. "A bid stacks up from a trade buyer or private equity perspective," said Tom Gidley-Kitchin, an analyst at Charles Stanley. Pharmaceuticals were strong on a Goldman Sachs note published on Wednesday, that was neutral on Astrazeneca, which gained 1.4 percent, and on Glaxo, up 0.8 percent, but which was positive compared with some brokers' views, traders said.
SAB Miller rose 1.3 percent after announcing tender offers for shares in its listed Ecuadorian subsidiaries. On the downside, International Power fell 2 percent on lack of sustained bid talk. "There was talk of it being stalked, but no news is bad news," a trader said. Clothing retailer Next fell 1 percent on market fears that it faces severe competitive threats, including from Internet shopping, traders said.
US crude slipped below $59 a barrel ahead of an Opec meeting likely to seal a deal to cut output. BP slipped 0.2 percent, and Royal Dutch Shell fell 0.6 percent.
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