THE FTSE 100 rose for a third straight day yesterday, with energy shares leading the way as oil prices gained and Royal Dutch Shell rallied after it announced jobs and spending cuts.
InterContinental Hotels climbed 4.8 per cent after the Financial Times reported that it had held talks with rival Starwood Hotels on a deal.
The FTSE 100 index closed 0.6 per cent higher at 6,668.87 points after touching a one-week high of 6,697.40 points earlier in the session.
The UK Oil and Gas index rose 3.1 per cent, the biggest gain by a sector, after oil prices rose.
US crude and gasoline stocks declined more than expected and U.S. oil production fell.
Royal Dutch Shell led the sector higher, rising nearly five per cent after the company said it would axe 6,500 jobs this year and step up spending cuts.
It plans to increase asset disposals to $50bn between 2014 and 2018 as it pushes ahead with its proposed $70bn acquisition of BG Group. Shares in BG Group jumped about four percent.
“Shell’s move of cutting jobs and reducing capex has pleased investors as it's a good way of maintaining a strong dividend culture,” Jawaid Afsar, senior trader at Securequity, said.
“Sentiment has also improved as its integration with BG is also going well.”
The broader market also got some support from earnings reports.
Rolls-Royce rose 2.6 per cent despite reporting a 32 per cent drop in half-year profits. The results were slightly better than expected after the engine maker slashed its forecasts three times in the past nine months.
On the downside, engineering and support services firm Babcock dropped nearly five per cent, the biggest decline in the FTSE 100 index, with revenue from the defence and security division coming in lower in the first half of the year.
BT Group, the UK’s broadband market leader, fell 1.2 per cent despite posting first-quarter revenue and earnings in line with forecasts.
“Results were in line with expectations but Global Services performance was disappointing despite all the cost cutting. Broadband disclosure was also slightly weaker than expected,” Brenda Kelly, analyst at London Capital Group, said.