The UK’s oil and gas index gained one percent as crude oil prices rose for the second day in a row, bolstered by expectations that the current surplus of oil supply is easing due to fighting in Iraq. This news helped to boost Royal Dutch Shell by 0.8 percent, and BP by 1.4 percent respectively.
Miners also posted gains, with BHP Biliton and Antofagasta both rising by 0.7 percent after Chinese factory activity shrank for the third month in a row. The weakness feeds expectations that the Chinese government will soon invest in stimulus measures to encourage more borrowing and lending.
David Madden, an analyst at IG, explained that in this instance investors are taking the view that bad news can be good news - China is expected to launch some aggressive stimulus measures in a bid to meet its current growth targets.
Overall, the FTSE 100 closed up by 0.1 percent, at 7,013.47 points - putting it less than two percent below its record high of 7,122.74, which it reached in April. The index has gained about seven percent since the start of the year and the current near-term target is for the FTSE 100 to stabilise around the 7,100 mark. This is a target that most investors agree is achievable in the short term.