Britain's blue chip index ended higher on Wednesday as buoyant US crude prices pushed heavyweight oil shares higher, while banking stocks suffered on fears over further rights issues. The FTSE 100 was up 48.9 points, or 0.8 percent at 6,083.6 after touching a low of 5,978.8.
The index, which has lost 5.8 percent this year, endured a rather choppy session but recovered from earlier losses to track US markets - buoyed by Boeing's results and ahead of an update from Apple. Among the UK's top gainers, oil stocks rallied as the US crude traded close to $118 a barrel. BP, Tullow Oil, Cairn Energy and Royal Dutch Shell gained between 1.3 and 4 percent.
A source familiar with the matter said Shell was cutting over one hundred jobs in Aberdeen, as it sells oil fields in the declining North Sea. Miners also tracked the rising oil price. Xstrata added 2.6 percent, Antofagasta and ENRC rose 2.5-8.3 percent.
Lonmin tacked on 0.5 percent after the platinum producer posted an 8.3 percent rise in second-quarter platinum sales. "The FTSE has almost become the biggest international index in mines - it doesn't reflect the UK economy at all," said Edward Menashy, an economist at Charles Stanley. "There are two problems that have affected the whole of this year - the credit crisis and the economic crisis and move towards a recession."
On the downside, Royal Bank of Scotland was a standout loser among financials, down 3.6 percent, with investors trying to predict whether any other banks would follow suit and issue a rights issue. On Tuesday Britain's second-largest bank announced a record 12 billion pound ($24 billion) rights issue to cover increased writedowns on the value of toxic assets and help repair one of the sector's most stretched balance sheets.
HBOS dipped 3.9 percent, Barclays shed 1.1 percent and Lloyds TSB was 2.1 percent lower. The DJ Stoxx European bank index lost 0.6 percent. Alliance & Leicester slipped 7.5 percent after joining Centrica in trading ex-dividend.
"The things that have been swinging us up and down have been the mining stocks and the banks," said Charles Stanley's Menashy. "In the hands of these two major big sectors, the market is either up or it's down." "The banking system has not really purged itself of these depths where people are confident enough to lend and borrow freely (and) that is a disappointment."
"Our strong point has been the financial sector and I need not say too many words about the financial sector. The banks are going to be crawling on their knees for the next two to three years to build up profits," Menashy added. The strength in world oil prices pulled the travel and leisure industry south however, with Thomas Cook, FirstGroup, British Airways all trading down.
Pharmaceuticals featured prominently on the FTSE 100 leaderboard after a flood of positive news. Shire jumped 6.6 percent after US regulators approved its biggest drug hope, Vyvanse for attention deficit hyperactivity disorder, as a treatment for adults. GlaxoSmithKline was up 1.6 percent after it said profits fell 5 percent in the first quarter.
The decline was less than analysts had feared however, helped by strong sales of over-the-counter remedies, which offset the decline in pharmaceuticals. AstraZeneca shares climbed 2.7 percent ahead of first-quarter results at 1000 GMT on Thursday. Among midcaps, oil and gas explorer Dana Petroleum jumped 17.36 percent after it discovered oil at West Rinnes in the UK Northern North Sea.
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