The FTSE 100 soared to a six-year high, buoyed by optimism that the global economic growth will remain strong in 2007.

Mining companies gained as traders bet that profits would be boosted by high commodity prices and strong demand. Oil stocks bounced back from their one-month lows and traders bet that Amvescap could be vulnerable to a takeover.

Amvescap gained 1.3 per cent to 603.5 pence after Canada's Power Corp clinched the purchase of Putnam Investments for which Amvescap was expected to bid.

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A measure of British manufacturing levels recorded its lowest growth in December for nine months. The index eased to 51.9 from 52.5, remaining at levels unlikely to sway policymakers at the Bank of England who are expected to raise interest rates in the months to come.

The FTSE climbed 1.5 per cent to 6,310.90, breaking past its February 2001 high of 6,260.

Nick Nelson, a strategist at UBS, has predicted that the benchmark will hit 6,550 this year, buoyed by further takeover activity and strong commodity prices. Analysts at US investment bank Lehman Brothers expect the FTSE to jump 11 per cent this year, extending last year's gains of more than 10 per cent.

But the UK index will lag its European counterparts, with Germany's DAX and the Paris-based CAC due to gain 18 per cent, Lehman said.

Trading today could remain relatively subdued with the US markets shut today for the death of former President Gerald Ford and Japanese stock exchange closed for a national holiday.

In the Far East, Hong Kong's Hang Seng index gained 345 points to close at a record 20,310. Australian shares also closed at a record as investors snapped up shares of resource companies on optimism that the global economy will remain healthy this year.

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Lonmin added 87p to 3,097p, Anglo American gained 2.5 per cent to 2,553p and Rio Tinto climbed 37p to 2,755p.

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Kelda led gains by several stocks boosted by takeover speculation.

Biffa and Scottish & Southern Energy also climbed on expectations that the companies could soon face bids. Kelda added 3.1 per cent to 955p, while Biffa rose 1.7 per cent to 312.25p. Scottish & Southern Energy climbed 40p to 1,594p.

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British Airways rose 2.5 per cent to 430.5p as traders bet that the nation's flagship carrier could also be targeted by a bid.

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BP climbed 0.9 per cent to 572.5 pence as Royal Dutch Shell rose 1.2 per cent to 1,807p.

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EasyJet jumped 13p to 626p after reports that it had held talks with budget airline AirAsia and Virgin Atlantic to offer low-cost flights between Europe and Australia. A spokesman for easyJet said it "is not in any talks with AirAsia or Virgin." Virgin said it conducts "talks with third parties all the time" while AirAsia declined to comment.

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Vodafone added 2.25p to 143.75p as investors welcomed news that it was less likely to snap up Hutchison Essar. This followed reports that Essar group, which holds a minority stake in the venture, had arranged financing to acquire the two-thirds of the company it doesn't own.

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Next gained 2.3 per cent to 1,842p as traders awaited its trading statement due for release this Thursday.

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PartyGaming jumped 11 per cent to 35.2p. The online gambling company, which acquired smaller rivals Empire Online and Intercontinental Online Gaming last week, is set to report its results tomorrow.

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Marks & Spencer gained 1.9 per cent to 730.5p after JP Morgan predicted that the retailer would release a positive Christmas trading update next week.

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Interserve climbed 18.5p to 419.5p after Cape confirmed that it had been interested in buying the company's industrial services division. But Cape noted that discussions had since ended. Shares of Cape inched 0.5 per cent higher to 250p.

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