Oil stocks power FTSE 100 to over two-month high

The FTSE 100 jumped to a two-month high on Tuesday, as oil stocks bounced back following a bullish comment on the sector by a brokerage and news that OPEC+ members were not discussing an oil output increase.

The commodities-heavy FTSE 100 UK100 closed 1% higher, to hit its strongest level since Sept. 13 and outperforming the pan-European STOXX 600 SXXP index.

Oil majors Shell SHEL and BP BP. gained 4.8% and 6.5%, respectively, as crude prices BRN1!, CL1! gained after Saudi Arabia's energy minister denied a report that said OPEC+ oil producers were discussing a potential output increase.

The surge in BP was also helped by Citigroup's "buy" rating on the stock, up from "neutral". The brokerage said it expects the rotation into energy stocks to continue.

Britain's energy sector (.FTNMX601010) surged 5.3% and base metal miners (.FTNMX551020) added 2.6% as metal prices gained.

"This (FTSE move) seems commodity driven. That's clearly highlighted but everywhere else we are just seeing a bit of choppiness," said Craig Erlam, senior market analyst at Oanda.

Craig mentioned that U.S. bank holiday later in the week could mean a quiet week for the markets.

Meanwhile, data showed Britain's government borrowed less than expected in October, although the budget deficit is likely to balloon in the months ahead thanks to energy bill support measures and a slowing economy.

UK markets have rebounded from sharp losses in October as the new government's budget plan, which included tax increases and spending curbs, restored a measure of calm among investors after a failed mini budget sent British markets in a tailspin.

The more domestically focused FTSE 250 midcaps (.FTMC) edged 0.1% up.

Among individual stocks, AO World AO. jumped 13.7% after the online electrical retailer struck a positive note on annual profit outlook due to its cost-saving steps.

Vodafone Group VOD slipped 1.7% after Credit Suisse double downgraded the stock to "underperform", saying it previously saw scope for buybacks, but slower delevering and surging bond yields meant the company would take a more conservative approach.

Petrofac Ltd PFC dropped 10.7% after the oilfield services provider said Sami Iskander would step down as chief executive officer at the end of March 2023.