The FTSE 100 Index took another step towards the 6000 mark after a sharp rise in oil prices caused shares in Royal Dutch Shell and BP to jump ahead.
With the pair accounting for one-fifth of the top flight’s value, the Footsie closed at another four-and-a-half-year high – up 16.8 points at 5863.
BP proved to be the main beneficiary from the return of oil prices to near 60 US dollars a barrel, which followed fresh disruption in Nigeria. Shares rose 12.5p to 668p, while Royal Dutch Shell gained 15p to 1888p.
Miners were also in positive territory as investors eyed further consolidation following Friday’s announcement of a possible bid for platinum firm Lonmin.
Xstrata lifted 41p to 1742p, while BHP Billiton gained 22p to 1006p and RioTinto added 78p to 2945p.
The progress of commodity-based stocks offset the latest blow for Vodafone shares following a downbeat note from Credit Suisse, which cut revenues forecasts for the next two years following the 3GSM conference in Barcelona.
The decline saw Vodafone shares fall 1.5p to 122.75p, a drop of more than 1%.
B&Q owner Kingfisher spent most of the session at the top of the risers board after bid rumours resurfaced – this time involving possible bid interest from US-based home improvement hain Lowe’s. While analysts pointed out that the report was one of several involving Kingfisher in recent months, shares closed 3% higher, up 6.75p to 231.75p.
There were also signs of a delayed reaction to Centrica’s decision to raise gas and electricity prices by 22% on Friday. The British Gas owner stood 10p higher at 296p, a rise of more than 3%.
British Energy was another in the energy sector to rise as unconfirmed reports emerged that it was in informal talks with EDF and other operators on plans to build a new nuclear power station in the UK. Shares were up 17.75p at 619.75p.
The gains offset falls for Northern Rock, which was 23.5p lower at 1126.5p after Friday’s rumours of a possible bid from Bradford & Bingley went cold.
Among other banks on the slide, HBOS fell 6p to 1023p and Barclays shed 9p to 644p ahead of full-year results tomorrow. Alliance & Leicester bucked the downward trend with a gain of almost 2%, up 21p at 1120.5p.
Takeover speculation also focused on BOC after a report at the weekend said the company had agreed to an £8bn (€11.6bn) takeover from German firm Linde.
While there was no confirmation from the company, BOC shares rose 22p to 1511p.
Outside the top flight, London Stock Exchange remained on the front foot despite Macquarie’s decision not to improve the value of its hostile bid. With other bidders still in the fray, LSE rose 5.5p to 829.5p.
The biggest Footsie risers were Schroders NV up 42p at 1100.5p, Schroders ahead 42.5p at 1172p, Centrica up 10p at 296p and Kingfisher ahead 6.75p at 231.75p.
The biggest fallers were PartyGaming down 4.25p at 118.75p, Northern Rock off 23.5p at 1126.5p, Cadbury Schweppes down 10p at 560p and Cairn Energy off 31p at 1873p.