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Britain’s leading
share index pushed higher on Tuesday, led by energy stocks with BP
boosted by Royal Dutch Shell bid interest talk. The FTSE 100 index
ended up 30.46 points, or 0.5 percent at 5,891.21, a closing level not
seen since June 2008.

“Volumes remain
thin, but the FTSE keeps going up, with oils adding the main fuel
today, although whether the 5,900 level can be breached without more
momentum is a big question,” said Mic Mills, head of electronic dealing
at ETX Capital.

Integrated oils
gave the blue chips strength, although the crude price slipped back
following strong gains made on Monday after data highlighted continued
growth from China. BP was the biggest FTSE 100 riser, up 3.2 percent as
traders cited vague talk of potential bid interest from Shell, ahead
1.4 percent. Both companies declined to comment. BP was also supported
by its announcement that it would sell a portfolio of oil and gas
assets in Pakistan for $775 million, above analysts’ forecasts.

In addition, oil
majors were helped by a bullish note from Credit Suisse, which raised
its oil price forecasts for 2011 and hiked target prices across the
sector. The broker reiterated that BP was its top sector pick.

Among individual
blue chip gainers, outsourcing firm, Serco, gained 2.1 percent after
being selected as preferred bidder for a prison management contract in
New Zealand, valued at around 190 million pounds. And Scottish &
Southern Energy added 1.2 percent after newspaper reports revived
possible takeover interest in the multi-utility.

Miners miss out

Miners were the
biggest blue chip fallers, retreating after gains on Monday, with
Lonmin shedding 1.1 percent. Whitbread, however, was the top FTSE 100
decliner, down 2.8 percent despite posting strong profit growth.
Panmure Gordon downgraded its rating to “hold”, saying it did not
expect consensus expectations to be raised. Tour operator, TUI Travel,
fell 0.6 percent as its German parent company, TUI AG, posted full-year
results, and as JP Morgan Cazenove cut targets for both TUI Travel and
mid-cap peer, Thomas Cook, down 0.9 percent.

Elsewhere on the
second line, housebuilders provided the main support led by Persimmon
and Redrow, up 5 and 4 percent respectively, after a survey said the
decline in house prices in England and Wales was at a slower pace in
November than analysts had expected.

British consumer
price inflation, however, rose unexpectedly to a six-month high of 3.3
percent in November, which could increase the pressure on the Bank of
England to raise interest rates.

U.S. monetary
policy was being debated at the last Federal Reserve Open Market
Committee meeting of 2010 on Tuesday, although analysts expected no
changes when the Fed’s announcement is made. U.S. blue chips were up
0.6 percent by London’s close, supported by stronger than expected U.S.
retail sales data.