By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- U.K. stocks climbed for a fifth straight day on Tuesday as weaker-than-expected inflation data eased pressure on the Bank of England to tighten monetary policy this year.

The FTSE 100 index gained 0.5% to 6,774.80, setting it on track for the highest close in almost three months.

Helping push the index higher, heavyweight oil firms advanced as oil prices moved closer to $97 a barrel. Shares of BP PLC (BP) put on 0.7% and Royal Dutch Shell PLC (RDSB) rose 0.7%.

Investors also welcomed the latest reading on U.K. inflation, which showed consumer prices grew by 1.6% in July, down from 1.9% in June and missing analyst expectations of a 1.8% reading. With the U.K. economy on a solid recovery track, a rapid decline in unemployment and inflation last month close to the BOE's 2% target, some economists had started to speculate that a rate hike could come as soon as November.

However, the July inflation data give the BOE's Monetary Policy Committee more reason to keep interest rates at a record low until the first quarter of 2015, Jake Trask, corporate dealer at UKForex, said in a note.

"With dovish comments from BOE Governor Mark Carney last week, this fall in inflation will provide the MPC with even more reason to hold out," he said. "We may learn more tomorrow about the intended time frame for a rate hike when the minutes of the latest MPC meeting are released."

The pound (GBPUSD) dropped after the data, trading at $1.6644, down from $1.6692 ahead of the report. In late U.S. trade on Monday the pound traded around $1.673.

Also falling in London, shares of BHP Billiton PLC (BHP) slid 3.9% after the mining firm said it will spin off several assets, including its nickel mines and aluminum smelters, which will be listed on Australia's stock exchange. The company also reported a 23% rise in annual profit.

Among other notable movers, shares of AstraZeneca PLC (AZN) gained 0.7% after the U.S. Department of Justice dropped an investigation into Plato, a clinical trial with heart drug Brilinta.

House builder Persimmon PLC rose 0.7% after posting a 57% increase in first-half pretax profit as it sold 28% more homes at higher prices, and reported "encouraging" summer trading. The earnings report comes a day after Rightmove, a company tracking real-estate prices in the U.K, said asking prices fell by 2.9% in August.

Other home builders further rose in London on Tuesday, with shares of Barratt Developments PLC up 2.7% and Taylor Wimpey PLC up 1.6%.

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