LONDON MARKETS: U.K. Stocks Pushed Higher In Broad European Markets Rally

By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- U.K. stocks climbed Wednesday, pushing to session highs alongside a broader rally among European stocks as investors bet on further stimulus measures from the European Central Bank.

The FTSE 100 jumped 1.3% to 6,446.31 in the wake of a below-consensus report on eurozone consumer prices. The data coming from Eurostat appear to "strengthen the case for there to be some kind of quantitative easing or monetary easing in the short-term rather than in the medium-term," said Richard Hunter, head of equities at Hargreaves Lansdown.

The eurozone is the U.K.'s largest trading partner, and weakness there has had a dampening effect on the U.K. economy.

Oil and gas stocks were higher. Tullow Oil PLC shares rose 2.6%, BG Group PLC advanced 1.4% and BP PLC (BP) picked up 1%. The oil sector has been hammered in recent weeks as oil prices have slid to more than five-year lows. Brent crude on Wednesday briefly fell below $50 a barrel for the first time since May 2009.

In terms of oil generally, "investors are starting to appreciate that there's a flip side to lower oil prices which is positive particularly for consumers, on the basis that it's effectively a tax cut, especially at the petrol pumps, and, of course, airlines and travel stocks," said Hunter.

Retail stocks had strong showing after J Sainsbury PLC (JSAIY) reported a narrower-than-expected decline in fiscal same-store sales of 1.7%, excluding fuel. The period included the key Christmas season. Sainsbury shares had been at the top of FTSE earlier Wednesday, but have since dropped by 2.7%.

But Tesco PLC (TSCDY) shares held to higher ground, rising 2%. Britain's largest supermarket chain is due to release a trading update on Thursday. Marks & Spencer PLC shares added 2.2%. Wm Morrison Supermarkets PLC turned 0.7% lower.

Meanwhile, Aggreko PLC shares rose 3.3% as the temporary-power provider said it sees a small increase in 2014 profit after it won a two-year contract in Argentina and extended an existing contract with the same customer by two years.

Royal Dutch Shell PLC (RDSB) turned 1.8% higher. The oil company has agreed to pay about $80 million to compensate a Nigerian community for damage from two oil spills in 2008.

Elsewhere, Persimmon shares rose 0.7% following the home builder's report that it sold 17% more homes at higher prices in 2014.

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