The UK's leading shares gained 1.25 per cent boosted by strength in oil majors and banks, and reflecting early gains on Wall Street.

A surge in the insurance majors lifted the FTSE 100, which closed up 53.02 points at 4,294.03, recovering more than half of last week’s 104.92 point decline.

Admiral jumped 27.5p or 3.21 per cent to 883.5p, Prudential gained 23.5points or 5.89 per cent to 422.75p and Friends Provident jumped 0.23p or 0.35 per cent to 65.47p.

The top riser was Lloyds, the banking group, which closed up 4.07p at 70.56p after Goldman Sachs upgraded its rating to "buy" from "neutral". Goldmans noted Lloyds was "the least expensive large cap in Europe."

Barclays also advanced, up 11.55p to 279.65p, having been upgraded to hold by Societe Generale.

Energy companies were given a boost from firmer oil which rose back above $70 a barrel. Royal Dutch Shell shares were up 27p to £15.36, and BP climbing 9.3p to 482.75p.

In Europe, Germany's DAX 30 closed up 108.6 at 4885.1 while France's CAC 40 closed at 3,193.68 points, up 63.95.

Wall Street was also boosted by rising oil prices. The Dow Jones industrial average closed up 90.99 points, or 1.08 per cent, at 8,529.38.

The gains came as investors awaited a raft of key economic news later in the week. Thursday is at the forefront of investors’ attention as it brings the European Central Bank’s latest interest rate decision and the closely watched US non-farm payrolls. Analysts expect June’s US unemployment rate to rise around 0.3 of a percentage point to 9.7 per cent. President Barack Obama has warned that it will top 10 per cent in the coming months.

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