Britain's leading shares rose today, lifted by strength in oil majors BP and Shell and gains in banks, with shares in Rolls-Royce rising over eight per cent after reassuring earnings.
Shares in insurer Royal & Sun Alliance rallied eight per cent amid hopes it might attract a bidder, and on rumours - which it denied - that its embattled chief executive had quit, dealers said.
By midday the benchmark FTSE index was up 44 points, or one per cent, at 4,408.8 points, off an earlier peak at 4,437.2 points but remaining at the upper end of the recent trading range roughly between 4,200-4,450.
Dealers said a late rally on Wall Street following upbeat comments on the U.S. economy from Federal Reserve bank presidents had boosted confidence.
Banks added 11 points to the leading index, while oils added 15 points, with BP and Shell both up over 2.5 per cent as crude prices move up on fresh concerns about a U.S. conflict with Iraq, which outweighed a rebound in low US crude stockpiles.
But analysts said that the rise in crude oil prices, hovering at just below $30 a barrel posed a risk to growth forecasts.
"The rise in crude has kept economists at the ready to downgrade GDP forecasts," said Martin Brooker, pan-European strategist at E*Trade Securities.
Telecoms added a further 10 points to the leading index as sector giant Vodafone rose 3.3 per cent, drawing support from gains on Nasdaq overnight.
US stock index futures indicated Wall Street was destined for a mixed start after Wednesday's late rally.
Shares in aero-engine maker Rolls-Royce gained over 10 per cent to 148-1/2, boosted by first half results which showed that debt was being held in check amid a downturn in the civil aviation industry.
In other earnings news, shares in mid-cap financial services firm Cattles rose four per cent after reporting an interim profit at the higher end of forecasts, and said it remained confident about its prospects.
Elsewhere in the mid-cap financial sector, shares in real estate agency Countrywide Assured rose 0.3 per cent after it said in its earnings statement that it was exiting the savings sector to concentrate on real estate.
The company also said it is also forming a strategic partnership with life assurer Friends Provident to sell Friends' mortgage-related savings products through Countrywide's estate agency branches.