Tullow Oil, Royal Dutch Shell and BG Group rose 3.4 to 6 percent after crude oil jumped 5 percent late in the previous session. Oil fell on Tuesday but held above earlier multi-year lows. [O/R]
"Some investors are feeling that they are getting a better value by picking those commodity stocks that have been hit pretty hard over the past few weeks," said Henk Potts, director of global research at Barclays. "We remain relatively positive on the outlook for equity markets."
The UK Oil and Gas index was up 4.2 percent, the biggest one-day percentage gain in more than three years.
British oil company BP rose 4.7 percent. Several traders cited market talk of a takeover bid from Royal Dutch Shell. Royal Dutch Shell and BP declined to comment.
Energy stocks helped the FTSE 100 index to close 1.3 percent higher at 6,742.10 points. It had fallen 1 percent in the previous session to a two-week low, its steepest one-day drop in 1 1/2 months.
The FTSE index is up more than 10 percent since Oct. 16, when it touched its lowest in more than a year. The rebound is partly driven by hopes for more economic stimulus in Europe.
"The (recent) slump in commodity prices is a negative, but both the mining and energy sectors are looking very cheap," said Robert Parkes, director of equity strategy at HSBC.
"A lot of bad news is already in the price, and there is an interesting bottom-up story developing in the form of improving free cash flow and the potential for higher returns to shareholders."
Among other movers, Friends Life rose 2.4 percent after British insurer Aviva agreed terms for a 5.6 billion-pound all-share takeover. Friends shareholders will get a second interim dividend of 24.1 pence per share.
(Editing by Jane Merriman)
By Atul Prakash
