FTSE closes at highest level for seven months

Rising oil prices and optimism that Greece will be saved from a calamitous default helped drive London’s leading shares index closer to the 6000 mark today.

Crude oil prices in New York rose 1% to a nine-month high of $105 after Iran halted supplies to the UK and France in retaliation for sanctions imposed by the EU.

This helped heavyweight BP’s shares to push through the 500p barrier for the first time since last January at one stage before it closed 10.3p higher at 499.3p. The wider FTSE 100 Index was up 40.2 points at 5945.3, its highest close for seven months.

Hopes that Greece will clinch the additional €130bn bailout it needs to avoid bankruptcy added to the recent positive mood for investors.

As the London market closed, eurozone finance ministers were meeting in Brussels to discuss the situation in the debt ravaged nation amid reports they were close to finalising a deal.

France’s Cac-40 and Germany’s Dax were up about 1% and 1.5% respectively, while US markets were closed for Presidents’ Day.

The pound was down against the euro at 1.20 after the single currency was boosted by the Greek optimism. But sterling was up against the dollar at 1.59.

And a surprise easing in monetary policy by China’s central bank boosted miners and other commodities-driven firms after the move in Beijing raised hopes for a pick-up in industrial demand.

Weir Group, which makes pumps for the oil sector, was the biggest riser, up 7%, or 135p to 2186p, while miner Vedanta Resources was 46p higher at 1358p.

Sentiment also continued to improve towards Royal Bank of Scotland, which was among the biggest risers, up 0.9p to 28.5p, while Lloyds Banking Group was up 0.9p to 36.3p.

This was despite expectations the pair will report combined losses of at least £4bn for 2011 on Thursday and Friday.

Amid signs of a resolution in the Greece crisis and with lenders poised to benefit from the recent signs of improvement in the global economy, shares in RBS have jumped 40% since the start of the year.

In a quiet session for corporate news, JJB Sports jumped 15% after it offered beleaguered investors a glimmer of hope in its survival battle.

The group’s like-for-like sales were down by 7.6% in the 26 weeks to January 29, but this was better than the 17.9% decline over the previous half year, while the company’s gross margin also showed improvement.

JJB, which rose 1.5p to 11.5p, is forecast to make a £60m loss in the financial year just finished. And despite today’s improvement in shares, the company’s market value remains at a paltry £33m.

The biggest Footsie risers were Weir Group up 135p at 2186p, Vedanta Resources ahead 46p at 1358p, Aviva up 12.6p at 382.6p and Royal Bank of Scotland ahead 0.9p at 28.5p.

The biggest Footsie fallers were Shire down 26p at 2252p, Tate & Lyle off 6.5p at 701p, Imperial Tobacco down 19p at 2500p, and Severn Trent off 11p at 1540p.