Britain's top shares gained 0.5 percent on Tuesday lifted by strength in banks and commodity issues after reassuring news on Greece's debt situation and as investors awaited the outcome of a US Federal Reserve meeting. The FTSE 100 closed at 5,620.43 points, up 26.58 or 0.48 percent.
Britain's top share index rose, recouping the previous session's falls as banks and commodity stocks rallied, though there was underlying caution ahead of a US Federal Reserve rate setting meeting. At 0908 GMT, the FTSE 100 was up 40.85 points at 5,634.70, after it closed 0.6 percent lower on Monday.
"We look to be surprisingly in positive territory, but I think it's fair to say that investor sentiment remains fairly volatile right now," said Peter Dixon, economist at Commerzbank. "The oil majors are being held up by the fact the oil price continues to hold up effectively to defy gravity, (but) banks are a bit of a mystery right now - that's a sector which is going to remain under pressure for some time."
Energy stocks were led higher by Royal Dutch Shell, up 1.3 percent, after the oil major said it was planning a return to robust growth in oil and gas production after years of decline, as it unveiled strong reserves additions that would underpin longer term growth. BP added 0.4 percent. The company will take a majority stake in a Canadian oil sands property.
And as crude steadied below $80 a barrel, BG Group and Cairn Energy added 0.4 and 0.6 percent, while Tullow Oil rose 0.8 percent helped by a target price hike from Citigroup. Banks rose, rebounding after falls on Monday, though with some investor jitters ahead of the new US banking regulation bill set to be unveiled on Tuesday. Royal Bank of Scotland was among the top blue chip gainers, adding 1.6 percent.
The bank is preparing a debt buyback scheme as it seeks to rearrange its balance sheet to boost its core capital, the Financial Times reported on Tuesday, citing unnamed sources. Barclays, aided by a price target hike from Morgan Stanley, put on 1 percent, while HSBC and Standard Chartered added 1.3 and 1 percent respectively.
Miners, the biggest weight on the index in the previous session, received support from firmer metal prices. Fresnillo, Antofagasta and Eurasian Natural Resources were the best off, climbing 1.2 to 1.8 percent. Rio Tinto put on 1.2 percent. The miner is in talks with China's top aluminium group Chinalco to develop the Simandou iron ore project in Guinea at an expected cost of $12 billion, an Australian newspaper said. G4S topped the FTSE 100 fallers list, off 2.1 percent, despite a 20 percent rise in full-year profits, with analysts pointing to shrinking organic growth and saying investors are unconvinced by the company outlook.
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