Energy shares, German data help FTSE to hit seven-week high

Britain's top share index climbed to a seven-week high on Tuesday, helped by encouraging German investor sentiment data and a rally in energy stocks on speculation that oil producing countries may agree to cut output. Sentiment improved after a survey showed German analyst and investor sentiment rose in November for the first time in almost a year, and data showed British inflation picked up slightly in October, leaving the Bank of England under no pressure to start raising rates.
"The FTSE 100 continues to build on its gains, with increasing euro zone optimism helping to compensate for a degree of profit-taking in the mining sector following advances yesterday," IG analyst Chris Beauchamp said, referring to a 0.6 percent fall in the UK mining index. "Tullow Oil continues to sit at the top of the leader board, thanks to broker upgrades."
The UK oil and gas index rose 1.1 percent, the top sectoral gainer, with oil companies such as Royal Dutch Shell, Tullow Oil and BP gaining 1.2 to 3.6 percent, mainly on expectations that Opec could agree on an output cut at next week's meeting to prop up tumbling prices. Talk about Opec's response to a 30-percent drop in global oil prices since June intensified this week after Venezuela called for increased co-operation within the cartel, as well as with non-members including Russia.
Oil rallied in morning London trading, but later fell to $78.66 a barrel after failing to break above the $80 mark. However, shares in energy companies retained their gains. "A level below $80 a barrel doesn't look sustainable. I see the price moving back towards $90-$95 in the coming months as oil producers might respond by reducing oil supply. That would be a positive for shares of energy companies," David Battersby, investment manager at Redmayne-Bentley, said.
Britain's blue-chip FTSE 100 index closed up 0.6 percent at 6,709.13 points after rising as high as 6,714.12, the highest level since late September. The index has surged more than 10 percent since a low in mid-October. Bullish updates from some firms also supported prices. British Land rose 1.6 percent after posting an 11.8 percent rise in half-year net asset value, reaping the benefits of London's booming property market.