London shares made big gains yesterday on the back of oil price rises and an upbeat outlook in the mining sector.

The FTSE 100 Index bounced back from three straight sessions of losses to close 57.5 points higher at 4547.2 as investors set aside worries about interest rates on both sides of the Atlantic.

Oil companies BP and Shell made strides after the price of a barrel of crude surged to its highest level for 13 years.

Mining stocks suffered in trading last week amid fears that demand in China was slowing, but a positive outlook from Rio Tinto put them back on the Footsie risers board yesterday.

Morale was also boosted by three surveys that showed the pace of economic recovery to be accelerating in the UK.

Growth in manufacturing accelerated last month on the back of higher productivity and strong international demand, while retail sales were above average for this time of year.

Even a lethargic start to trading on Wall Street failed to wreck the mood, with the Dow Jones Industrial Average travelled below the break-even mark.

Mining group Anglo American led the way, climbing 40p, or four per cent, to 1175p, after industry rival Rio Tinto said Chinese demand for iron ore remained strong.

BHP Billiton was next, up 15p to 466p, while Rio Tinto was ahead by 32p at 1269p.

Oil group BP advanced 4p to 492p, while Shell improved 7p to 396p as investors looked forward to the companies making further moves into the market to buy their own stock.

News that FTSE 250 rival Tullow Oil planned to buy a larger South African counterpart added to the rosy glow in the sector. Tullow Oil shares rose 12 per cent, or 10p, to 97p, after it announced the proposed acquisition of Energy Africa for £319m.

Vodafone rose 2p to 139p as it took another step in the extension of its third generation mobile phone technology by launching commercial 3G services in Europe.

Few major companies are due to report results in London this week, but medical devices group Smith and Nephew moved 18p higher to 591p as investors looked forward to its first-quarter results tomorrow.

One of the stocks on the rise outside the FTSE 100 Index was Internet bank Egg, which climbed five per cent, or 8p, to 163p, amid speculation that MBNA was poised to make a bid.

Sofa retailer DFS improved five per cent, or 19p, to 444p on news that its executive chairman had raised his proposed offer for the chain to £468m.

A 57 per cent reduction in annual losses to £25m failed to prevent business telecoms provider Thus moving 1p lower at 27p.

Two of the day's biggest fallers were ICI, down 5p at 213p, and Daily Mail and General Trust, down 9p at 661p.