Strong miners helped drive Britain's top share index to a more than five-month closing high on Wednesday, boosted by firmer metals prices and hopes for fresh economic stimulus in the United States. The FTSE 100 index ended up 85.76 points, or 1.5 percent, at 5,747.35, its highest closing level since April 26, and its biggest one-day percentage rise since September 20.
Miners led the charge, with Vedanta Resources and Anglo American up 5.9 percent and 5.4 percent respectively, as the weak dollar encouraged demand for dollar-denominated commodities, with copper at a 27-month high. "We're mainly being charged higher by the miners. It's all about the fact that traders are now pricing in extra stimulus from the Fed after the FOMC (minutes) last night, so we're expecting it to happen early next month," Joshua Raymond, market strategist at City Index, said.
Mexican precious metals miner Fresnillo added 3.3 percent after it said its silver and gold production rose to a record in the third quarter, beating expectations, and reiterated that it is on track to meet its full-year targets. Announcements from China also helped, with the government saying it will promote sales of construction material in rural areas, and as the world's fastest-growing economy reported soaring crude imports.
Integrated oil stocks were led higher by BG Group, up 2.4 percent, on talk of a possible bid from China's CNOOC, traders said. And oil services firms AMEC and Petrofac added 3.6 and 4.2 percent respectively after Washington lifted its ban on deepwater drilling seven weeks ahead of schedule.
Also underpinning market gains were positive earnings from US bank J.P. Morgan, which followed chipmaker Intel's upbeat fourth-quarter sales outlook overnight. However, UK banks largely missed out on the rebound after Asia-focused Standard Chartered, down 1.7 percent, announced plans to raise $5.3 billion via a rights issue.
Barclays slipped 0.9 percent as traders speculated that the UK bank may have to raise up to 8 billion pounds due to forthcoming tighter regulatory capital requirements, based on Standard Chartered's move. ICAP climbed 4.7 percent after Barclays Capital lifted its target price for the inter-dealer broker (IDB) to 535 pence from 500 and said ICAP remains its top pick among exchanges/IDBs.
Reed Elsevier added 2.5 percent, with traders citing talk that Wolters Kluwer is interested in making a bid for the Anglo-Dutch publishing company. Luxury group Burberry topped the FTSE 100 fallers' list, off 3 percent, as some analysts questioned whether a small upgrade in profit guidance was enough to sustain recent strong gains.