By Sara Sjolin, MarketWatch

Banks and oil firms lead U.K. benchmark higher

LONDON (MarketWatch) -- The U.K.'s benchmark stock index kicked off the new month and quarter in positive territory on Wednesday, boosted by a solid reading on the country's manufacturing sector.

The FTSE 100 index added 0.5% to end at 6,809.50, scoring its biggest gain in more than a week.

On Tuesday, the benchmark slumped 1.7% as investors banked profit after a solid quarter. The FTSE logged a 3.2% quarterly gain, the biggest since the last quarter of 2013 (http://www.marketwatch.com/story/ftse-drops-but-stays-on-track-for-best-quarter-in-more-than-a-year-2015-03-31).

After a wobbly start on Wednesday, U.K. stocks were sent higher after the CIPS/Markit manufacturing purchasing managers index for March rose to an eight-month high. The gauge came in at 54.4, ticking up from the 54 level in February and higher than consensus forecasts of 54.2. The PMIs across the eurozone were also generally upbeat (http://www.marketwatch.com/story/eurozone-manufacturing-activity-picks-up-in-march-2015-04-01).

One other gauge of economic health was less upbeat, with the Office for National Statistics reporting a 0.2% drop (http://www.ons.gov.uk/ons/rel/productivity/labour-productivity/q4-2014/index.html) in labor productivity measured by the hour in the fourth quarter of 2014.

The pound (GBPUSD) rose after the PMI to trade as high as $1.4873, but later slipped back to $1.4838. It exchanged hands at $1.4819 late Tuesday.

"Any upside to the pound is going to be limited, and it's going to struggle to find any traction as we near the election," said Angus Campbell, senior analyst at FxPro. "The rallies have all been so short-lived, and I think investors don't want to hold sterling ahead of the election."

Wednesday's movers: Shares of Lloyds Banking Group PLC (LYG) rose 1.4% after Jefferies lifted the lender to hold from underperform.

Among other banks, Royal Bank of Scotland Group PLC (RBS) climbed 1.6%, Barclays PLC (BCS) put on 2.8%, and HSBC Holdings PLC (HSBC) climbed 0.8%.

Oil firms, which were slammed lower by the declining oil price on Tuesday, moved broadly higher on Wednesday. Shares of BG Group PLC added 2.70%, Royal Dutch Shell PLC (RDSB) picked up 1.6%, and BP PLC (BP) gained 1.2%. Crude-oil futures rallied on Wednesday (http://www.marketwatch.com/story/oil-futures-choppy-as-markets-eye-iran-talks-us-supplies-2015-04-01-11035551).

FirstGroup PLC climbed 6.8% after the transportation operator said trading in the fourth quarter was in line with management's expectations.

On a more downbeat note, shares of Kingfisher PLC gave up 3.3%. The do-it-yourself retailer jumped 4.3% on Tuesday after announcing a round of store closures at its B&Q chain (http://www.marketwatch.com/story/kingfisher-net-profit-falls-will-close-stores-2015-03-31).

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