British shares edged up to two-month highs on Thursday, led by gains in the energy sector and among precious metals miners. The bluechip FTSE 100 index ended up 0.3 percent in thin pre-Christmas volumes at its highest closing level since October 11 and its highest overall since October 25.
Oil company BP rose 1.3 percent and was the biggest contributor in terms of index points. Energy sector plays rose as oil prices were supported by a pause in the dollar rally and optimism that crude producers will abide by an agreement to limit output. The lower dollar also gave a lift to gold prices, which in turn boosted shares in precious metal miners Fresnillo and Randgold, among the biggest gainers on the FTSE and up 2.8 and 2.5 percent respectively.
The broader mining sector, however, remained the biggest drag, taking around 2 points off the FTSE 100, as the price of copper hit a one-month low after Chinese metal imports dropped sharply in November. BHP Billiton and Rio Tinto fell 1.6 and 1 percent respectively. China is the world's biggest consumer of metals.
"Some of the mining stocks, the amount they've jumped from the lows this year, they've probably out-done the bounce in metals prices," Jasper Lawler, senior market analyst at London Capital Group, said. "(With) people looking ahead to 2017, and (if) metal demand doesn't recover and supply doesn't contract as much as thought then probably those mining firms are the most exposed."
British mid caps stocks outpaced their bluechip peers, with the FTSE 250 index rising 0.8 percent. Shares in car dealer Inchcape were the top gainer on the index, jumping 7.8 percent to their highest since early September after the firm bought a distribution business in South America. "Inchcape has been active in South America for more than 30 years and the acquisition will bolster its presence in Chile and Peru and add new markets of Colombia and Argentina," Russ Mould, investment director at AJ Bell, said.