Mining shares shot higher, boosted by strong Chinese industrial data and record copper prices, while oil shares bounced, powering Britain's FTSE 100 index to a sharply higher close on Thursday. Copper's surge to record highs above $3,340 a tonne lit a fire under shares in BHP Billiton, Rio Tinto and Chilean copper miner Antofagasta, which all put on between 3.6 and 4.2 percent. Steelmaker Corus rose 5.3 percent, inspired by the miners.
BHP Billiton shares were given an extra lift by an upgrade from Dutch bank ABN Amro, which lifted its rating on the stock to "buy" from "add" citing an expectation of continued demand for bulk commodities from Asia.
"Miners are not wildly expensive. People are looking at the price of the commodities they sell and working out that some of their profit forecasts are maybe a bit too low, assuming that commodity prices stay where they are now," said Dave Bradbury, Head of Equities at Canada Life.
Oil major Shell helped give the FTSE a push, rising 1.8 percent after investment bank Goldman Sachs upped its rating to "in-line" from "underperform" at the same time cutting BP to "in-line" from "outperform". BP rode out the downgrade, closing 0.6 percent up as oil prices held close to $56 a barrel.
The index closed 25.5 points higher at 5,045.0, helped late in the session by a strong run on Wall Street. Miners accounted for 9 points of the gain and oils for 8 points.
Market watchers said that although the FTSE had recouped most of Wednesday's 27-point fall, the overall trend was unclear as uncertainty remained about the direction of UK interest rates.
"We now seem to think that they're going down a bit but not by much. It's not obvious you want to be in growth or value stocks or high-yield stocks, so people are just occasionally lighting on sectors they think are attractive," said Bradbury.
Shares in Carnival closed 5 percent higher after the firm, which operates the Cunard and Princess cruise lines, reported a forecast-beating 23 percent rise in quarterly earnings and raised its full-year earnings forecast.
Other leisure stocks were in demand, with Whitbread rising 2.9 percent after Merrill Lynch upgraded its stance on the company to "buy" from "neutral". Merrill said its change of stance was based on pressure on Whitbread to restructure, which could see it return a further 800 million pounds to shareholders.
Hilton put on 2.3 percent after analysts at Smith Barney said they had a positive meeting with the hotelier's management and that prospects are bright for the second half of the year. The bank repeated its "buy" stance, and dealers said a research note said Hilton management said they aim to realise 300-400 million pounds from asset sales by early 2006 and a substantial part of proceeds will be returned to shareholders.
Tobaccos went lower after CSFB downgraded its rating on the sector to "neutral" from "overweight", with British American Tobacco down 2.2 percent and Imperial Tobacco off 1.6 percent.
Retailers were left out of the FTSE rally after UK data showing the weakest UK retail sales rise in more than 6 years. Marks & Spencer closed down 0.4 percent and Next lost 0.8 percent.
Car rental firm Avis Europe led mid-caps lower with a 5.2 percent fall after unveiling a deeply discounted rights issue to raise 110 million pounds to fund its recovery. Dealers said the cash call highlighted that tough industry conditions were not improving.