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LONDON (Alliance News) - UK equities ended the last full trading session of a holiday-shortened week with some festive cheer Wednesday, as the FTSE 100 posted its biggest one-day gain in nearly three months.

The FTSE 100's heavyweight resource sector, which has been the source of much of the blue-chip index's weakness over the past year, powered its rally on Wednesday. Anglo American ended as the best performer, up 9.1%, with fellow miner Glencore up 7.0% and BHP Billiton up 5.9%.

"Stock markets have been encouraged by a stabilisation in commodity prices which has picked up steam since the Chinese government announced plans to increase its budget deficit next year," said CMC Markets analyst Jasper Lawler.

Oil shares also were amongst the best large-cap performers. Oil prices jumped after the US Energy Information Administration said crude oil stocks fell last week. The EIA said its stock of oil fell by 5.9 million barrels in the week ending December 18 against expectation for a 1.1 million barrel rise.

The reduced stock overhang lifted oil prices. At the London close, Brent oil was quoted at USD36.92 a barrel, compared to USD36.39 a barrel at the close Tuesday. West Texas Intermediate traded at USD37.34 a barrel, having reached parity with Brent on Tuesday and then powering past its fellow benchmark on the strength of the US stocks data.

Oil and gas company BG Group was up 5.7% at the close, while the 'A' shares of BG-acquirer Royal Dutch Shell were up 4.4% and BP was up 4.5%.

The price of gold continued to slide. At the close it traded at USD1,069.14 an ounce versus USD1,075.90 at the market close Tuesday.

The FTSE 100 ended up 2.6% at 6,240.98, its best one-day percentage gain since October 5. Only one FTSE 100 stock, Sports Direct International, down 0.4%, ended in the red. Year-to-date the leading UK stock index is still down 5%. The FTSE 250 ended Wednesday up 1.3% at 17,391.88 and the AIM All-Share closed up 0.2% at 725.42.

European stocks also ended much higher, with the CAC 40 in Paris closing up 2.3% and the DAX 30 in Frankfurt up 2.3%, on the final session of the week for the German market.

On Wall Street at the London close, the Dow Jones Industrial Average was up 0.7%. The S&P 500 was up 0.9% and the Nasdaq Composite up 0.6%.

The positive start in New York came after a string of upbeat US economic releases. The Commerce Department released a report showing US new home sales increased for the second consecutive month in November. The report said new home sales climbed 4.3% to an annual rate of 490,000 in November from the revised October rate of 470,000.

A separate report from the Commerce Department showed US durable goods orders were virtually unchanged in November after surging by 2.9% in October. Orders had been expected to pull back by about 0.5%. Excluding orders for transportation equipment, durable goods orders edged down by 0.1% in November after rising by 0.5% in October. Economists expected ex-transportation orders to be flat.

The University of Michigan said consumer sentiment improved by more than initially estimated in December. The report said the final reading on the consumer sentiment index for December came in at 92.6 compared to the preliminary reading of 91.8 and the final November reading of 91.3.

The dollar gained support after the data. At the London close the euro traded the greenback at USD1.0877, compared to USD1.0973 at the close Tuesday.

The pound, however, continued to bounce back from its eight-month low against the dollar of USD1.4810 on Tuesday and was at USD1.4872 at the London close.

Sterling momentarily dropped following a downward revision to third quarter UK GDP earlier in the day. The Office for National Statistics said gross domestic product climbed 0.4% from the second quarter, which was revised down from 0.5% estimated at the end of November. On a yearly basis, UK economic growth was revised down to 2.1% from 2.3%.

GAME Digital ended as the worst performer in the FTSE All-Share, down 38% at 128.00 pence, having hit an all-time low of 119.88p earlier in the session. The gaming retailer issued a profit warning as it was hit by "disappointing" sales ahead of its key Christmas trading period and as it saw a bigger-than-expected drop-off in content sales for the previous generation of video games consoles.

The company reported a 57% decline in sales for content for the Xbox 360 and PlayStation 3 consoles in the 21 weeks to December 19, which it described "unexpectedly steep". This more than offset a 20% rise in sales of content for the new generation Xbox One and Playstation 4 systems, which were released towards the end of 2013.

InterBulk said it will be acquired by Den Hartogh for 9.00 pence per share, more than double its closing price on Tuesday of 4.00p. The agreement values InterBulk at GBP42.1 million in total. On Wednesday, the company's share closed at 8.55p.

InterBulk said its board of directors has unanimously recommended the takeover offer and expects the deal to complete in the first quarter of 2016.

In the economic calendar, the minutes of the Bank of Japan's last monetary policy meeting are released at 2350 GMT, before Governor Haruhiko Kuroda makes a speech at 0400 GMT. Also on Thursday are British Bankers' Association's mortgage approvals for November at 0930 GMT.

US initial and continuing jobless claims are at 1330 GMT, and EIA natural gas storage is at 1530 GMT.

There are no scheduled updates in the UK corporate calendar.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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