FTSE on the up

BP led a fresh rally for the FTSE 100 Index today as higher oil prices and the potential resumption of dividend payments cheered investors.

Buoyed by the 3% rise for the heavyweight oil stock, London's benchmark index started the new quarter where it left off after its best September in 13 years.

Gains for other commodity stocks and a 5% jump at gas exploration group BG, amid fresh takeover speculation, meant the FTSE 100 Index closed 44.3 points higher at 5592.9.

The resources sector was lifted by figures pointing to stronger growth in Chinese manufacturing, suggesting the country is not slowing as sharply as feared.

The economic picture in the United States was more mixed as evidence of weaker activity among industrial firms was offset by data showing a slight improvement in consumer sentiment and spending.

With investors clinging to hopes of recovery, oil prices climbed above $80 a barrel for the first time in six weeks, leading to gains of 31p to 1888p for Royal Dutch Shell and a 34p improvement to 1308p at Tullow Oil.

Shell has been mentioned as a potential suitor for BG Group, which topped the risers board with a gain of 51.5p to 1170p.

New chief executive Bob Dudley's first day as BP boss following the departure of Tony Hayward went well as shares rose 12.7p to 440.5p. Investors were encouraged by his comments that BP's board will consider the return of the company's dividend early next year.

The rise came as BP said the clean-up bill for the Gulf of Mexico oil spill now stood at 11.2bn (€8.13bn).

In currency markets, the euro drew encouragement from economic turnaround hopes as it reached a six-month high against the dollar and edged ahead against the pound.

The recent weakness in the dollar, which slipped against sterling today, has been an upward factor in crude prices as it makes oil cheaper for buyers in other currencies.

The wider market will be tested in the coming weeks as the third quarter earnings season looms in the United States and the UK.

Marks & Spencer, which is due to post a trading update next week, rose 3.5p to 391.6p and supermarket Tesco lifted 4.1p to 428.1p ahead of half-year results on Tuesday.

In a quiet session for corporate news, claims handling firm Helphire rose 5%, up 2p to 39p, after a return to profits in the year to June 30.

The surplus of £392,000 (€450,900) compared with losses of £149m (€171.4m) a year earlier and offset warnings of lower-than-expected trading, as economic conditions and record petrol prices keep drivers off the roads.

The biggest FTSE 100 risers were BG Group up 51.5p at 1170p, ARM Holdings ahead 12.8p at 405p, BP up 12.7p at 440.5p and Lonmin ahead 47p at 1716p.

The biggest fallers were Experian down 19p at 674p, Aggreko off 31p at 1539p, Compass down 9.5p at 521p and Associated British Foods off 18p at 1031p.