Britain's leading shares ended up almost 1 percent on Wednesday as record high crude prices lifted the oil sector, while Enterprise Inns led individual stocks higher. The FTSE 100 ended up 45.8 points, or 0.7 percent at 6,261.0 - its highest closing level in four months. But the UK's blue chip index is still down 3 percent for the year.
Strong crude prices helped pump heavyweight oil shares higher, with BP and Shell up between 1.3 and 1.4 percent. Also supporting stocks, sterling fell to an 11-week low against the dollar. On the macro front, the Bank of England began a two-day meeting and will announce its interest-rate verdict at 1100 GMT on Thursday.
Hopes for a surprise rate cut drove banks higher, with Barclays, HSBC and Lloyds TSB up 0.3-2.4 percent. Shares in HBOS rose 3.9 percent after Goldman Sachs trimmed its estimates after the mortgage bank's 4 billion pound rights issue but confirmed a "buy" rating.
"The bears have been huffing and puffing, but so far this rally refuses to be blown down," said one London trader. "European stocks have been on the advance today mainly as a result of the positive rally into the close in the US overnight."
Forecast-beating US non-farm productivity data also boosted risk appetite and equity markets across the board. Enterprise Inns soared nearly 30 percent after it got the green light from the British government to convert to a tax-efficient property status, in a move expected to drastically change the way pub firms are structured.
In related shares, Punch Taverns, Marston's and Mitchells & Butlers rose 4.7 to 17.3 percent to extend earlier gains after positive broker comment and an update from Restaurant Group had sent shares higher.
Housebuilders were also in demand ahead of the central bank's decision, with Persimmon climbing 5.4 percent, while Taylor Wimpey and Barratt Developments both gained more than 4 percent. Building materials distributor Wolseley, which earns half of its revenues in North America, was 6.2 percent higher.
"Small targets are continuing to be met by the FTSE 100 as it baby-steps its way back from the credit crunch-fuelled lows of earlier this year," said Anthony Grech, an analyst at IG Index. "Today saw the 6,250 mark breached as the FTSE seems to have grown a thick skin with regards to negative news from across the pond."
Further on the upside, Carphone Warehouse added almost 6.7 percent as traders cited renewed speculation of a bid for the retailer. Carphone declined to comment. But International Power shed 2.7 percent. The company said it would issue a bond to raise around 500 million euros ($774 million), and said trading for the year was in line with expectations.
Also in the red, Liberty International dropped 3.1 percent after the property company said its net asset value per share fell to 1,181 pence in the quarter ended March, from 1,264 pence, reflecting unsettled UK property market conditions. Miners tracked metal prices lower, with BHP Billiton, Lonmin , Anglo American, Xstrata, Vedanta Resources and Antofagasta losing 0.4 to 4.3 percent. Antofagasta, Bunzl, Old Mutual and Rexam also fell after going ex-dividend.
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