Bid talk surrounding Rio Tinto returned to the trading floors, with BHP Billiton still seen as the favoured predator. Dealers said that the talk is being triggered by the approaching completion tomorrow of Rio’s Alcan takeover, which would make a clean target for BHP.

BHP was the top gainer, driven by a recovery in metals prices, led by copper. It closed up 75p at £17.75, while Rio jumped 137p to £43.34.

Tullow Oil, which entered London’s blue chip index only in September, soared 20½p to a new high of 668p helped by a record high oil price, which jumped above $97 in US trading, by talk that the Government of Ghana wanted it to start production from its oil discovery there a year early and by its inclusion in Morgan Stanley’s MSCI Burra global index of the world’s most-traded stocks.

Other inclusions were the miners Lonmin, up 82p at £32.97, Kazakhmys, up 33p to £14.09, and Antofagasta, up 19p at 800p. Aegis, down 2¾p at 118¾p, Bellway, down 28p at 981p, and Michael Page, off 12½p at 395p, were among the worst FTSE 250 performers as they were ejected from MSCI Burra.

The oil price rise, triggered by speculation of a US oil inventory drop to-day, helped BP, up 1½p to 633½p. However, Shell fell 8p to £20.09 after Credit Suisse cut its rating to “neutral”. The oil price made British Airways the worst blue chip performer, down 16p at 389p since a third of its costs are for aviation fuel.

Northern Rock lost 6.7p at 164.1p as banks refused to bounce back from Monday’s falls. Royal Bank of Scotland, the favoured “sell” of Citigroup, was off 8½p at 455½p, although Barclays edged up 2½p to 524p. It bought back four million shares yesterday, proving that it was not about to ask for a Bank of England loan.

J Sainsbury also regained a little of Monday’s losses, rising 5p to 445p as Robert Tchenguiz denied rumours that he would have to sell his stake.

Bovisrose 7p to 650p despite saying that its house prices would fall. But rival housebuider Taylor Wimpeylost 4¾p at 227¾p. Credit Suisse said those able to buy and hold for the long term should do so since prices were now equal to net asset value and there were still not enough houses being built to meet future demand.

Talk that eBay might be eyeing QXL Ricardo, the online auctioneer, helped it jump to 120p to £15.10.

The London Stock Exchange was up 50p at £17.10 as Citigroup raised its earnings forecasts.

— New York: Shares on Wall Street ended higher as oil prices topped $97 a barrel, boosting shares of energy producers, while technology shares rallied on optimism ahead of Cisco’s earnings. The Dow Jones industrial average closed up 17.50 points at 13,660.90.

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive