Oil giant's recovery fuels London rise

LONDON'S top share index soared a further 3 per cent yesterday thanks to renewed investor confidence and a near-6 per cent rise from BP.

The oil giant raced 28.8p ahead to 520.8p amid signs that its attempts to control the Gulf of Mexico oil well spill may be finally working.

BP's gains helped the Footsie rally step up a gear, closing 157.09 points ahead at 5,195.17.

News that the US economy grew at a 3 per cent annual rate from January to March, slightly weaker than an initial estimate of 3.2 per cent growth a month ago, failed to halt the shares bounce back.

Investors on both sides of the Atlantic were focused on cheap-looking stocks after the falls of recent sessions. The Dow Jones Industrial Average on Wall Street rose 1.8 per cent within hours of opening.

Confidence was also boosted by a much-needed gain for the euro after the single currency set a new four-year low against the dollar on Wednesday. The single currency was up 1 per cent to just over $1.23 and also strengthened against sterling, with the pound down to below 1.18.

Michael Hewson, analyst at CMC Markets, said: "Risk appetite has returned as UK equity markets picked up where they left off on Wednesday.

"For now, it seems that investors are taking the opportunity, given the declines that we've had this month, and the long weekend coming up, to snap up some bargains."

Mining and financial shares were again on the front foot as investors eyed bargains following the market's recent slump to an eight-month low.

Hedge fund giant Man Group set the pace with a gain of 23p to 238.3p, but eyes were on insurer Prudential as it moved 7 per cent higher, up 35p to 547.5p, with speculation swirling around its 24 billion deal to buy AIG's Asian business.

Vague trader rumours suggested Pru may pull the planned takeover before putting it to shareholder vote. Fellow life and pensions group Aviva was also making strong advances, up 21.4p to 321.3p.

Vedanta Resources led the miners higher with a gain of 138p to 2,311p.

Outside the top flight, defence research group Qinetiq jumped 12 per cent after new chief executive Leo Quinn announced details of a major restructuring.

The company posted a bottom-line loss and will suspend dividend payments for a year, but shareholders approved of Quinn's strategy as shares rose 13.7p to 130p.

There was no such rally for JJB Sports, which is also under pressure after reporting losses of 68.5 million for the 12 months to 31 January. Sales have picked up since then, but JJB shares still tumbled 2.75p to 17.5p.

News of a return to profits at the Daily Mail and General Trust helped the FTSE 250 newspaper publisher rise 2 per cent, up 9.9p to 481.9p.

The firm reported a 42 per cent leap in underlying pre-tax profits and revealed a revival in advertising revenues that has continued into the second half.

Glasgow-based engineering powerhouse Weir Group surged ahead by 3.7 per cent, or 33p, to close at 917.5p after signing a joint venture agreement with Mitsubishi.