LONDON MARKETS: FTSE 100 Snaps Losing Streak As Oil, Miners Rise; Royal Mail Drops

By Carla Mozee, MarketWatch U.K. construction activity slows to 13-month low

LONDON (MarketWatch) -- U.K. stocks jumped Tuesday, with gains for the embattled resources-sector leading the benchmark FTSE 100 to its first win in four sessions.

But the pound pulled back after U.K. data showed growth in the key construction sector slowed last month.

The FTSE 100 climbed 1.3% to 6,742.10, with shares of Tullow Oil PLC rising 6.3% to become the strongest advancer on the main U.K. equity index.

Tullow shares had tumbled nearly 22% since Thursday as part of a broader selloff in the oil sector after the Organization of the Petroleum Exporting Countries held to its production target. That decision was a disappointment to investors who had looked to the group to address oversupply and a related slide in prices. Read: OPEC is wrong to think it can outlast U.S. on oil prices

Shares of oil firm BG Group PLC surged 3.4%, BP PLC picked up 4.7%, and Royal Dutch Shell PLC tacked on 4.1%.

Oil stocks held to higher ground, though crude prices fell back into negative territory on Tuesday. U.S. crude futures for January delivery (CLF5) dropped below $68 a barrel, losing nearly 2%. Brent crude also fell nearly 2% to below $72 a barrel in London.

Mining stocks were also higher, getting a breather from recent selling as the industry grapples with slowing in the Chinese economy and a slump in iron-ore prices. Shares of BHP Billiton PLC (BHP) climbed 2.2% and Rio Tinto PLC (RIO) ended up by 0.7%

Friends Life Group Ltd. shares bounced up 2.4% after the company and Aviva PLC agreed on a 5.6 billion pound ($8.8 billion) deal that would create the U.K.'s largest insurance, savings and asset-management company. Aviva shares edged up 0.1%.

But shares of Royal Mail PLC fell 3% after regulator Ofcom said it won't impose new conditions on Royal Mail's direct-delivery competitors as the "universal postal service is not currently under threat."

Sterling: Last month, the pace of business activity among U.K. construction companies eased, led by the weakest expansion in civil engineering since July 2013, according to Markit and the Chartered Institute of Procurement & Supply. Their U.K. construction PMI came in at 59.4, the smallest expansion since October 2013.

"This is a sign that consumption within the country is slowing down, which is a negative sign for the economy," Naeem Aslam, chief market analyst at AvaTrade, in emailed comments. "The data has also dampened the sentiment for an early increase in the interest rate for sterling."

The pound (GBPUSD) fell to $1.5646 from $1.5718 ahead of the data. Sterling late Monday bought $1.5733.

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