LONDON: UK shares rose on Monday as hopes for progress in Russia-Ukraine peace talks lifted sentiment globally, with financials leading the advance on FTSE 100, while Rio Tinto fell after proposing to buy the remaining of Canada’s Turquoise Hill.

The blue-chip FTSE 100 index climbed 0.5% in volatile trade, with banks and insurers leading the gains.

“If there is a ceasefire, that takes some heat out of commodities and fears of inflation or stagflation, that would be seen as a positive for economy and banks will be seen as one way of playing that after a weak spell for their share prices which has left them trading at discounts to book value,” said AJ Bell investment director Russ Mould.

However, the advance was limited as energy and mining shares fell 1.6% and 5.0%, respectively, tracking weaker commodity prices.

“Some of it is profit-taking or people running for cover if they’ve taken more speculative position in the commodity space where you’ve seen some very, very sharp rises,” said Mould.

Both Russia and Ukraine gave their most upbeat assessment yet of prospects for talks, with a Russian delegate quoted as saying there could soon be draft agreements, boosting investors’ appetite for riskier assets like stocks.

Yields on UK bonds of both longer and shorter-dated rebounded after two straight sessions of falls, as traders braced for a likely third rate rise in a row by the Bank of England this week to tame the dramatic surge in inflation.

Index provider FTSE Russell said it would delete Russia-focused Evraz, Polymetal International, Petropavlovsk and Raven Property Group after trading in their shares was curtailed by a pull-back from the country’s stock market by leading brokerages.

The domestically focussed mid-cap index advanced 1.3% to extend the previous week’s gains and outperform the benchmark index.