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UK's FTSE led higher by oil stocks, positive economic data

Tue, 07th Apr 2015 16:08

* FTSE 100 enjoys biggest one-day gain since Jan

* Positive PMI data supports market

* JP Morgan downgrade weighs on IAG

* Rise in copper price boosts miners (Updates with closing prices)

By Sudip Kar-Gupta and Lionel Laurent

LONDON, April 7 (Reuters) - A rally in energy shares helpedthe UK FTSE 100 hit its biggest one-day gain since January, asstocks caught up with a strong start to the week for oil pricesand a rise in Britain's monthly services-sector growth.

The FTSE 100 index closed up 1.9 percent, at 6,961.77points. That was better than a 1.5 percent rise for thepan-European FTSEurofirst 300, as European stockmarkets reopened after Easter weekend and caught up with gainson Wall Street on Monday.

Brent crude extended gains on Tuesday after Monday's5 percent jump in oil prices when traders tempered their view onhow quickly Iranian exports would be rebuilt following apreliminary nuclear deal with Iran.

Oil's gain sent shares of UK stocks such as BG Group and Royal Dutch Shell up between 3.9 and 6.7 percent,traders and analysts said.

BG Group's shares had their biggest one-day gain sinceSeptember 2011, according to Reuters data.

Adding to a run of positive economic news, the Markit/CIPSservices purchasing managers' index (PMI) recorded its biggestgain in more than a year.

"If this trend continues throughout the week, the UK indexcould return to the 7,000 level that has receded into thebackground over the past 10 days," Spreadex analyst ConnorCampbell said.

Mining companies, which account for about a tenth of theFTSE's overall market capitalisation, gained as the price ofcopper climbed on Tuesday.

Glencore and Rio Tinto were among thebest-performing stocks on the FTSE 100 in percentage terms.

Royal Mail shares were up 1.3 percent, tracking asurge by shares of Dutch logistics and delivery company TNT after FedEx made a 4.4 billion-euro ($4.8billion) takeover offer.

However, British Airways operator International ConsolidatedAirlines Group (IAG) fell 1.2 percent after JP Morgancut its rating to "neutral" from "overweight".

"IAG is suffering a little bit from the JP Morgan downgrade,but overall the market looks pretty healthy, and we should seesome near-term upside," said Dafydd Davies, a partner at CharlesHanover Investments.

The stock market largely ignored former prime minister TonyBlair's warning of uncertainty for businesses caused by PrimeMinister David Cameron's plan to hold a referendum on EuropeanUnion membership if he is returned to power next month.

A Reuters poll last week forecast record highs for the FTSE100 by the end of 2015, but it also predicted that the index waslikely to wobble in the run-up to the May 7 vote.

"Over the next few weeks we are going to have morevolatility because of the election," said Nick Beecroft, analystat Saxo Bank. (Editing by Robin Pomeroy)

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