Abbot Group, the oil rig designer and contractor, was in focus yesterday amid raised hopes of a takeover offer from private equity.

The group, which in October said that it had received “approaches”, has seen its shares drift as 3i is thought to have pulled out of a 375p-a-share bid after a disagreement with Abbot management over disposals of assets. However, 3i’s rivals First Reserve and Candover, both of which have experience in oil services, are thought to be still in contention.

Abbot’s rose 26¾p to 351p in heavy afternoon trading on ten times the normal volume. Its peers gained more modestly, with Hunting up 35p to 695p as the oil price was on the rise again after Opec agreed to limit output to current levels.

This, combined with hopes of an interest rate cut, rising metal prices and mining consolidation hopes lifted the FTSE 100 by 178.6 to 6,493.8.

Housebuilders, retailers and banks, having led the fallers on Tuesday, on fear of rates being held, this time led the FTSE 100 up.

Taylor Wimpey was the top gainer, up 15.7p at 203.2p. DSG International was not far behind, up 6.6p at 115.5p. Royal Bank of Scotland recovered 26½p to 465½p. Anglo American rose 155p to £32.73 on speculation that Xstrata, up 138p at £34.58, could bid £40 a share. It was stoked by the Credit Suisse analyst Jeremy Gray, who said that Xstrata could offer half cash and half shares at this price and still enhance its earnings.

Standard Life rose 7¼p to 270¼p after Panmure Gordon’s Barrie Cornes said that he expected the insurer to reinsure at no cost its £12 billion preflotation annuity portfolio early next year, releasing capital for investing in growth areas.

WH Smith, up 7½p to 326½p, has been edging off recent lows amid talk of a potential bid. Nick Bubb, of Pali, believes the group’s airport outlets make it ripe for a takeover by a big European travel retailer such as Lagardère’s Hachette Distribution, which owns the French airport business Relay. It could also demerge Smith’s travel arm, worth about £450 million.

Regent Inns, the Walkabout and Jongleurs group, off ¾p to 22¼p, was also seen as vulnerable to a bid after this week’s profit warning. Greg Fee-hely, of Altium Securities, said: “Regent is now too small to weather the challenges ahead and should seriously consider selling itself.”

Game Group was the top mid-cap performer, up 28½p to 209p after it won competition clearance for its Gamestation acquisition.

Hays, the recruiter, edged up 1¼p to 116¼p after a 9¾p fall on Tuesday. Credit Suisse said that Hays was the most vulnerable to proposed new rights for temporary workers that the EU is debating.

Emap edged down 6p to 832p despite a rumour that it was close to achieving its £700 million asking price for its consumer magazine division.

COLT Telecom rose 21p to 206p as talk that Fidelity is trying to arrange a sale to AT&T for about 300p refused to die.

New York: Shares rallied as new data showed the US economy to be in good shape, indicating that another cut in interest rates was still a possibility. At the close, the Dow Jones industrial average was up by 196.30 points at 13,445.00.

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