LONDON: Britain's blue-chip share index edged higher on Wednesday and erased losses made earlier in the day as the price of oil steadied, easing pressure on mining and energy stocks from concerns surrounding ample supplies and low demand.
The UK oil and gas index was flat in percentage terms after oil prices inched over $31 a barrel, although investors were still concerned about a bigger-than-expected buildup in U.S. crude inventory and about the pace of economic growth in China.
The mining index, however, fell 0.5 percent with BHP Billiton, Antofagasta and Anglo American dropping 2.2 to 3.5 percent.
Glencore, however, rallied 3.2 percent with traders citing investors closing short positions in the stock.
"It is becoming clear that equities have now become even more strongly correlated to commodity prices. Commodities stocks are expected to remain under selling pressure as the weakness in metals and oil prices is not seen disappearing soon," said Jawaid Afsar, senior trader at Securequity.
Some investors hoped the U.S. Federal Reserve would leave interest rates unchanged following a two-day meeting which commenced on Tuesday.
"All eyes (will be) on ... the Fed release to see if they're going to be taking a more dovish stance, in which case a slightly weaker dollar could see some respite for commodity-related entities," Dafydd Davies, partner at Charles Hanover Investments, said.
The benchmark FTSE 100 index was up 0.4 percent at 5,933.00 points by 1507 GMT, outperforming the broader European market,
In negative territory, Royal Bank of Scotland fell over 3 percent after saying it would take a 2.5 billion pound ($3.6 billion) hit to its fourth-quarter profits after setting aside more cash to cover litigation costs, compensation for mis-selling loan insurance and an impairment charge at its private bank.
Some companies advanced following their updates.
Sage shares rose 6.6 percent, the top gainer on the FTSE 100 index, after the software company said its business remained on track.
Shares in food and support services company Compass Group rose 3.3 percent following a price target upgrade from Credit Suisse. Cruise operator Carnival was also up 1.7 percent, as was hospitality company Whitbread, up 1.9 percent.
"Travel and leisure stocks are seeing quite significant upticks this morning, supported by ... the lower for longer oil price led by weakening international demand for oil," Charles Hanover Investments' Davies said.
Aberdeen Asset Management rose 0.8 percent after the company said funds under management increased by 2.4 percent quarter on quarter to 290.6 billion pounds ($416.4 billion), boosted by market and currency gains.
However, it saw more clients pulling cash from its funds in the December quarter due to concerns around economic growth.
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