Anglo American underperformed a booming mining sector yesterday amid talk that its Anglo Platinum subsidiary was preparing a $2 billion (£1.2 billion) rights issue to be announced with its first-half results in 12 days’ time.

Anglo Platinum, the world’s biggest producer of platinum, is not thriving. It said yesterday that headline earnings per share for the six months to the end of June would be up to 99 per cent below the same period last year, hit by weakening platinum prices and rising mining costs. In February it cut spending and axed the final dividend to counter mounting debt. If a rights issue is made, Anglo American, up 52p at £18.00, would have to inject $1.6 billion to keep its stake at 80 per cent. That may encourage its shareholders to have another look at Xstrata’s all-share takeover approach.

Xstrata was the top-performing FTSE 100 stock, closing 51.7p up at 666p. The index closed up by 108.78 points, its biggest rally since April, at 4,346.46, its highest level for a month, as confidence about the global economy returned. Crude oil prices were also buoyed by a big fall in crude inventory levels in the United States. That, in turn, lifted oil company shares.

Tullow Oil rose 43½p to 934½p, helped by the Ghanaian Government approving its production plan for the Jubilee Field. Kosmos Energy, its partner in the field, also helped sentiment by raising a new loan.

Insurers, highly geared to the performance of equities, rose strongly, with Old Mutual closing up 5.8p at 86.3p. Legal & General rose 3.62p to 57.33p and Prudential 19p to 386¾p.

Smith & Nephew rose 7p to 445¾p after the Court of Appeal gave the go-ahead for the British launch of a potential blockbuster product — a technology that uses a vacuum pump to close wounds, a process known as “negative pressure foam”. Credit Suisse said that the ruling, removing an injunction obtained by Kinetic Concepts, S&N’s American rival, which dominates the fast-growing $1.5 billion market, should help S&N to clear a similar injunction in the US.

Icap was one of only three fallers in the leading index, closing 12¼p down at 430¾p as it traded ex-dividend and produced a lacklustre trading statement. Reckitt Benckiser was another faller, ending the day down 5p at £28.18, as Credit Suisse said that it would lose the patent on its blockbuster Suboxone drug in less than three months and would inevitably face generic competition straight away. However, the broker retained “buy” advice and a £32 price target.

Hochschild Mining fell 21¼p to 279p as Alberto Beeck, a former non-executive director and a cousin of the founder, sold 20 million shares, or 6.5 per cent, at 275p each in a placing.Cadbury rose 15½p to 543½p after Nomura said that first-half results in a fortnight should reassure on profitability and added that it expected Kraft to make a bid.

FirstGroup, the transport operator, fell 11¾p to 340½p before a trading statement today. Attention has turned to its debt pile after its all-share offer for National Express, up ½p to 288p, was rebuffed.

• New York: Stocks soared as investors viewed impressive results by Intel and optimistic Federal Reserve economic forecasts as reason to splash out on Wall Street. The Dow Jones industrial average was up 256.72 points at 8,616.21 at the close.

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