Britain's FTSE 100 cruised to a fresh 44-month peak on Tuesday as oil stocks led by BG Group were propelled higher by yet another record high for crude prices, while miners added further support following a bullish broker note.
BHP Billiton rose 1.4 percent and Xstrata gained 1.9 percent as analysts at Deutsche Bank said the biggest bull market for copper since the 1970s had the potential to run further.
"Not only has the copper price defied the doomsayers, but sustained price strength remains a distinct possibility," Deutsche Bank said.
Mobile operator O2 also climbed the FTSE leaderboard, up 2 percent, as rumours of a possible bid from KPN once again made the rounds, although the Dutch telecoms operator denied it had any interest in the British group.
The FTSE 100 ended up 19.4 points, or 0.4 percent, at a session peak of 5,363.7 - a level last seen in early December 2001.
US stocks were also higher ahead of an interest rate decision due at 1815 GMT. The Federal Reserve is expected to hike rates for a 10th time to 3.5 percent.
Oils contributed the bulk of the market's gains after crude prices passed $64 a barrel, hitting another record high as traders fretted about possible Middle East supply disruptions as well as recent US refinery problems.
BG Group, which was also boosted by renewed take-over talk, led the way among blue chips with a 3 percent rise and Shell added more than 2 percent. Mid-caps Cairn Energy and Paladin Resources jumped nearly 7 percent each.
Asia-focused bank Standard Chartered also climbed as analysts upgraded it on the back of strong results.
But not all stocks followed the stronger market trend. Utilities were among the heaviest fallers, which analysts attributed to valuations and a change in market tactics.
"We've felt for a couple months that utilities were looking pretty fully valued and that they'd rallied on the back of hunger for yield," said strategist Andrew Bell of Carr Sheppards Crosthwaite.
"What's going to drive equity markets higher from here will be growth and earnings coming through, rather than a revaluation of yield. In that environment you'd be looking away from utilities, which are regulated and have had a very strong run."
Severn Trent lost 2.5 percent and Kelda dropped 1.7 percent.

Copyright Reuters, 2005

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