UK shares advanced on Tuesday in choppy trade, buoyed by a rally in the energy sector after oil prices rose on a report that Saudi Arabia and Russia had reached agreement on output restrictions. The FTSE 350 Oil and Gas index ended 1.5 percent higher, turning positive in the last two hours of trade. Global oil prices hit fresh five-month highs on Tuesday, piercing $44 a barrel and extending earlier gains after a report that top producers Russia and Saudi Arabia had agreed to freeze output ahead of a much-anticipated producers meeting on Sunday.
Miners also rose, led higher by a 9.1 percent rise in Anglo American. The company said rough diamond sales during the third cycle of the year continued a reasonably positive trend. The mining sector was up 4 percent, supported by steady copper prices and encouraging economic signals from China. "Commodities have been rallying very strongly since about February ... and that has obviously given miners a bit of a tailwind," Ken Odeluga, market analyst at City Index, said.
The bluechip FTSE 100 index was up 42.27 points, or 0.7 percent at 6,242.39 points by the close. Energy and materials shares contributed nearly 24 points to the index's advance. The top faller on the index was equipment rental company Ashtead Group, which dropped nearly 3 percent after investment bank HSBC downgraded its rating on the stock to "hold" from "buy" based on findings about the age of its fleet.
"Upon a closer examination, Ashtead's fleet may not be materially younger than that of the peers, at least on a basis that matters commercially," analysts at HSBC said in a note. Intu Properties also suffered from a target price cut from Societe Generale, which sent its shares 1.7 percent lower. Hospitality company Whitbread fell 2.3 percent after the boss of Costa, a chain of coffee shops which it operates, left the company. "Whilst the company has certainly lost a lot of internally generated knowledge/talent, we believe the board has sought to bring news skills to the group especially as it embarks on an ambitious and more internationally focused phase of growth," analysts at Credit Suisse said in a note.
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