FTSE rises 1.3 percent on commodities

By Dominic Lau

LONDON (Reuters) - The top share index rose 1.3 percent on Friday as high oil and metal prices boosted commodity shares, while M&A talk propelled Resolution (RSL.L), Kingfisher (KGF.L) and Standard Chartered (STAN.L) higher.

The FTSE 100 .FTSE closed up 85 points at 6,661.3, after rising 1.5 percent in the previous session. The benckmark index gained 2 percent this week and is up more than 7 percent so far this year.

European shares also finished higher for the day.

"There is an increased expectation that the Federal Reserve will reduce interest rates next week and possibly further after that. That is generally lending support to the market at the moment," Darren Winder, equity strategist at Cazenove, said, adding that valuations remained attractive.

Commodity shares added 57 points to the index as oil prices rallied to a fresh record high and metal prices firmed.

Oil major BP (BP.L) advanced 2.7 percent and its rival Royal Dutch Shell (RDSa.L) climbed 3 percent. Gas producer BG Group (BG.L) added 2.6 percent.

In the mining sector, BHP Billiton (BLT.L), Rio Tinto (RIO.L), Anglo American (AAL.L), Xstrata (XTA.L), Vedanta Resources (VED.L), Antofagasta (ANTO.L) and Kazakhmys (KAZ.L) all rose.

Banks were another standout sectoral gainer, helped by comments from Countrywide Financial Corp CFC.N that it expected to be profitable in 2008. The stock had earlier been beaten down by a third-quarter loss following deterioration in the U.S. housing market.