By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- The U.K.'s FTSE 100 index inched higher on Tuesday, as gains for tobacco firms offset losses for oil producers, which were spurred by a surprise cut in Saudi Arabia oil prices.

The London stock benchmark rose 0.1% to 6,494.24, after closing with a 0.9% slide on Monday.

Helping push the FTSE above the flatline on Tuesday, shares of Imperial Tobacco PLC (ITYBY) picked up 1.7% after the company posted a rise in full-year profit.

British American Tobacco PLC (BTI) added 1.1%.

Legal & General Group PLC climbed 2.3% after the insurance firm said annuity sales have risen, despite the U.K. government's budget earlier this year, which ended the requirement for pensioners to buy annuities when they retire.

Adding pressure in London, however, oil firms moved firmly lower after Saudi Arabia late Monday unexpectedly cut prices for crude sold to the U.S. The price cut also sent oil futures sharply lower, with the December contract (CLZ4) sliding 1.8% to $77.38 a barrel.

BP PLC (BP) dropped 1.4%, Royal Dutch Shell PLC (RDSB) slumped 1.7% and BG Group PLC lost 1.3%.

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