By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- BP PLC posted one of the biggest gains among U.K. stocks Monday, advancing on reports the oil major plans a multibillion-pound share buyback, while banking shares rallied with the broader European equity markets.
The FTSE 100 index jumped 1.5% to 5,690.74, climbing back from its lowest level since late July reached last Friday.
BP shares (BP) gained 2.8%, as the Sunday Times reported that the company is planning to spend as much as 3.7 billion pounds ($5.9 billion) to buy back stock in order to revive its share price.
The buyback could come as early as next year, the Times report said. A representative from BP declined to comment.
Shares of other energy companies also rose, as crude-oil futures jumped close to $90 a barrel in New York. Royal Dutch Shell PLC (RDSB) traded 0.8% higher.
Shares of mining companies also were on the rise, tracking rising metals prices across the board.
BHP Billiton PLC (BHP) rose 3%, while shares of Rio Tinto PLC (RIO) added 2.8%.
Eurasian Natural Resources Corp. shares climbed 4.4%, after RBC Capital Markets upgraded its rating to outperform from underperform.
Among notable banking shares, HSBC Holdings PLC (HBC)(HBC) gained 2.9%, as the bank said it's in talks to sell its stake in China's second-largest insurance firm. A deal for the interest in Ping An Insurance (Group) Co. of China Ltd. could net HSBC a $7.5 billion profit.
Shares of Lloyds Banking Group PLC (LYG) also rose, up 2.3%, as the bank said it has agreed to sell a portfolio of Irish real-estate loans to Risali Ltd. for £149 million in cash.
And Barclays PLC shares (BCS) gained 5.2%, moving higher after Goldman Sachs raised its rating on the bank to buy from neutral.
"If Barclays delivers on a business plan to generate returns that match the group's cost of capital, the stock could offer sector-leading upside, on our analysis. Meanwhile, in the absence of such a plan, the stock should have some downside support," the Goldman Sachs analysts said.
"In our view, this creates a compelling risk/reward ... and we add the stock to the buy list," they said.
Other banks also posted gains, reflecting a risk-on trend seen across global financial markets on hopes for U.S. policy makers in negotiations to avert the so-called fiscal cliff.
Shares of Standard Chartered PLC rose 2.2%, while Royal Bank of Scotland Group PLC (RBS) gained 2.6%.
In technology, shares of ARM Holdings PLC (ARMHY) added 2.5%. Morgan Stanley said they remain buyers of ARM after the chip maker gave a "very bullish presentation" at a conference in Barcelona.
Outside the major index in London, shares of platinum miner Lonmin PLC rallied 8%, after the platinum miner, the subject of a reverse takeover offer lodged by Xstrata PLC , said a proposed rights issue valued at $817 million on a gross basis passed with 91.1% of the votes in favor.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires