As a former mercenary, Tony Buckingham must have muscled in on plenty of other people’s business and yesterday the word was that someone was planning to do precisely that to him.

Shares in Heritage Oil, of which Mr Buckingham is chief executive and in which he has a 33 per cent stake, soared by more than 11 per cent amid speculation that Royal Dutch Shell may gatecrash its £3.5 billion merger with Genel Energy of Turkey.

The two groups last month agreed a deal to form what would be a FTSE 100 Kurdish-focused oil explorer. Since then, the pair have been doing the rounds in the City and everything is said to be progressing nicely.

However, the deal is far from done and dusted, given that it is non-binding and that there is no break fee.

Traders therefore bought into suggestions that Shell was considering a 700p-a-share offer for Heritage. However, followers of the Anglo-Dutch oil major may have reason to doubt the rumour. Such a deal would probably alienate the Iraqi Government, with which the company hopes to do business, because of political conflict between the Kurdish regional government and officials in Baghdad.

Nevertheless, shares in Heritage rose by 50.2p to 490¼p, while Shell ticked up 4p to £14.69.

The FTSE 100 rose 35.55 points to 4,237.68, driven by the mining sector and financials.

Miners were boosted by stronger metal prices and upbeat comments from UBS, which forecast a stronger than expected commodity market driven by “extraordinary” demand from China as the country’s property market recovers. UBS said that Rio Tinto, up 97½p at £20.19½, was its top pick. Fresnillo, the Mexican silver miner, led the index, rising 62½p to 533p. Lonmin gained 92p to £10.77 and Kazakhmys was up 49½p at 640½p.

Banks were buoyed by better than expected results from Goldman Sachs, the US investment bank, with Barclays rising 3.6p to 300p, Royal Bank of Scotland gaining 0.72p at 36.92 and HSBC 10.3p better at 510.8p.

Vodafone was the biggest blue chip faller, down 2.2p at 112.8p, amid cautious broker notes. UBS downgraded the telecoms group to “neutral”, from “buy”, and reduced its price target to 115p, from 150p. The broker said that exchange rates, the weak economic climate and loss of market share would put pressure on Voda’s earnings. Moreover, it advised clients to sell the stock in the short term, since forthcoming key performance indicators are likely to show deterioration across the board, with the European businesses experiencing a 5.5 per cent fall in revenue.

In the FTSE 250, Melrose rose 10p to 103½p after the industrial investor said it had cut net debt by £127 million since the start of 2009 to £416 million and that trading is in line with expectations. Oriel reiterated its “buy” rating, and noted that the stock was a good economic recovery play with a strong management team.

PV Crystalox slid 3½p to 76p after its peer Q-Cells SE, the world’s largest solar panel maker, cut its full-year sales outlook after prices fell sharply in the second quarter, dashing hopes of a recovery in the sector.

• New York: Shares were lifted in mid-session by an energy sector advance, which offset retail sales data pointing to weak consumer demand. The Dow Jones industrial average was up 27.81 at 8,359.49.

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