A further fall in the price of oil to below $60 a barrel failed to dent share prices in the commodity sector, and BP gained 10.7p to 383.95p even though it is exposed to Russia through its holding in Rosneft.
The oil slump has been worst felt in Russia, where a sudden hike in interest rates to 17 per cent failed to prevent a fresh decline in the value of the rouble, which dropped to a record low.
After a rollercoaster of a day in London, the FTSE 100 Index – which yesterday hit its lowest level this year – closed up 149.11 points at 6,331.83, helped by news that inflation fell to a 12-year low of 1 per cent in November as lower food and petrol prices kept a lid on living costs.
Trustnet Direct analyst Tony Cross said: “Whether this is the start of a Santa rally remains to be seen, but even if it is it’ll be a hollow victory given the beating stocks have taken of late.”
Banking investors seemed relaxed about the Bank of England’s stress tests – as expected, the unquoted Co-operative Bank was the only lender not to pass.
Barclays was up 2.2 per cent or 4.95p at 230.15p and HSBC added 11.3p to 603.5p.
Royal Bank of Scotland rose 2.3 per cent or 8.3p to 372p after saying it would issue £2 billion worth of convertible bonds in the wake of the stress test, while Lloyds Banking Group shrugged off uncertainty over whether it can restart dividend payments next year, ending the session up 3.3 per cent at 76.86p.
Elsewhere, Tesco rose 2.65p to 167.45p despite industry data showing another fall in market share for the troubled supermarket giant. However, the drop in sales of 2.7 per cent for the 12 weeks to 7 December marked the retailer’s best performance since June.