FTSE moves closer to record highs as miners and banks gain

LONDON: Britain's top equity index rose back within reach of record highs on Tuesday as steady metals prices helped mining stocks rebound, while Barclays rose after it was named as second-favourite European banking stock by Credit Suisse.

Traders added that signs of takeover activity, with Nokia planning to buy telecoms peer Alcatel-Lucent just a week after Royal Dutch Shell's bid for energy rival BG, were also propping up stock markets. Alcatel-Lucent shares were up 12 percent.

The blue-chip FTSE 100 index was up by 0.13 percent at 7,073.32 points by 1030 GMT, trading close to a record high of 7,095.36 points reached on April 10.

Admiral Markets' Darren Sinden said those investing in the FTSE 100 had taken heart from the pick-up in mergers and acquisitions (M&A) activity, and from the fact that the FTSE 100 had managed to stay above a key level.

"We've managed to hold above 7,000 points, and signs of M&A are always welcome in the market," said Sinden.

Barclays rose nearly 1 percent, with traders citing a Credit Suisse note saying Barclays was its second-favourite European investment banking stock behind UBS. However, the note said Credit Suisse remained cautious on the sector's overall prospects due to tougher regulation and litigation issues.

Miners such as Rio Tinto and BHP Billiton rose 2.2 percent and 2.0 percent respectively as prices of metals bounced up off their earlier lows.

Analysts said British consumer price inflation data, which held steady at a record-low zero percent in March, should be positive for the market.

"Falling inflation has largely been driven by falling fuel and food costs, and this should be positive for the economy," Ben Brettell, senior economist at Hargreaves Lansdown, said.

Uncertainty before next month's British election has weakened sterling, but the FTSE 100 has continued to push higher. Traders have said that a weak pound could help the exports of the FTSE's international companies, and the FTSE remains up 8 percent since the start of 2015.

However, Aberdeen Asset Management fell 2.4 percent after investment bank RBC cut its rating on the stock to "underperform" from "sector perform".