Miners provided the bedrock as benchmarks pushed to their best levels in six years, with Kazakhmys, Xstrata and Rio Tinto all climbing in tandem with metals prices.

The mining sector has been among the laggards over the past three months amid concerns about slowing demand, with the FTSE 350 mining index losing 5 per cent since November compared with a 3 per cent gain for the wider market.

However, some investors believe that losses on the commodity markets were more to do with hedge funds selling down and that fundamental demand should remain robust. Copper and has rallied sharply in recent sessions, while nickel hit record levels yesterday.

“We believe that the emerging market growth story is still intact,” Credit Suisse said in a note upgrading the sector.

Kazakhmys jumped 51p to £11.19, having been the sector’s main casualty since November with a 16 per cent loss.

HSBC was advising clients to load up on the Kazakhstan copper miner ahead of economic reports due Friday on US housing and durable goods sales.

According to the broker, US aircraft orders surged in December and mortgage applications were strong.

Its team also predicted that copper demand should improve following the Chinese new year next month.

Rio Tinto was up 100p to £27.60, Xstrata firmed 109p at £24.42 and BHP Billiton rose 26p to 965p as Citigroup reiterated “buy” advice.

Vedanta Resources was up 65p to £11.90 to lead the blue-chip risers. The Indian group was also the subject of takeover rumours — a peculiar suggestion given that Anil Agarwal, Vedanta’s founder and chief executive, holds nearly 54 per cent of its shares.

News that four members of the Bank of England’s Monetary Policy Committee had opposed this month’s interest rate rise stoked hopes that borrowing costs will peak earlier than expected.

The FTSE 100 index finished less than five points off its best close since 2001, rising 87.2 to 6,314.8 and set a six-year high of 6,320.9 during the session.

Hanson was among the day’s main speculative features on renewed gossip that the aggregates maker could be a target for Lafarge, its French peer. Shares climbed 22½p to 799½p, despite analysts arguing that any potential buyer could be put off by Hanson’s outstanding asbestos liabilities and UK competition issues.

BG Group was another popular subject among the punters, with shares up 13½p to 676p as bid theories continued to swirl.

BG’s natural gas portfolio and above-average reserve life made it “an obvious M&A target”, Merrill Lynch said, with the broker’s team speculating that Gazprom could be among a host of companies interested.

But with BG already trading at a 15 per cent premium to the sector, it saw takeover prospects providing the backdrop rather than the main subject.

Diageo rose 19½p to £10.00½ after an American industry survey showed that demand for spirits had accelerated, with the Smirnoff vodka maker increasing its share of the market. Bernstein Research said the figures bode well for Diageo’s interim results on February 15.

A JPMorgan tip helped United Utilities to climb by 20p to 772p. “Contrary to consensus, we consider United Utilities one of the most probable takeover candidates,” it said.

The home shopping group N Brown was up 27¼p to 311½p to lead the mid-cap risers after accompanying news of better than expected trading with an £80 million cash return to investors, equivalent to 27p per share. Debenhams missed out on the day’s firm trend as Morgan Stanley, one of the banks to back its controversial flotation last year, said clothes sales will probably disappoint against management’s ambitious guidance. The shares fell 2½p to 167½p.

• NEW YORK: US stocks rose on optimism about tech companies after Yahoo! said a new web advertising system would contribute to profits sooner than expected and Sun Microsystems’ profits beat forecasts. The Dow Jones industrial average climbed 88.00 points to close at 12,621.80.

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