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Hopes of an imminent recovery in the world's third-biggest economy have breathed fresh life into commodities.
China reckons it has begun to see the first green shoots of economic recovery, and that was enough to send the buyers driving up the price of raw materials.
Oil climbed more than $1 to almost $68 a barrel while copper changed hands on the spot market almost $10 dearer at a record high of $229.20 an ounce. Gold is also nudging back towards a thousand bucks an ounce, trading at $981.
Citigroup says commodity prices in general have posted their biggest monthly gain since 1974. A weaker dollar has also helped stoke demand.
Understandably, they were leading the stock market higher today, accounting for six out of 10 of the best-performing blue-chips.
Among the miners, Xstrata climbed 71p to 755p, Vedanta added 167p at 1748p and Anglo American 148p at 1925p. Oil shares were also enjoying good gains. Cairn Energy, with big reserves in India, jumped 190p to 2680p, and BP put on 10p at 521p. Royal Dutch Shell was 46p ahead at 1721p.
The Organisation of Petroleum Exporting Countries last week forecast that the price of oil will continue rising on world markets, and is likely to touch $80 a barrel by the year end.
With the miners and oil explorers commanding such a heavy weighting in the FTSE 100 index, the rest of the market had little option but to join in the charge. The FTSE 100 index climbed back above the 4500 level with a rise of 95.84 to 4513.78.
The wider FTSE 250 index surged 180.98 to 7752.98. New York added to the momentum this afternoon with share prices surging on the back of better-than-expected manufacturing numbers for last month. Investors were also cheered by the biggest increase in spending on US construction in eight months. Most analysts had been braced for a decline. The Dow Jones responded by extending recent gains by 200.8 to 8701.13.
The banks posted strong gains on the back of stock shortages. Dealers say investors who bought the banks when they were bumping along on the bottom at the start of the year are clinging onto stock which is exacerbating the problem for traders. Barclays climbed back above the 300p resistance level with a rise of 17¾p to 315¼p as more than 77 million shares changed hands. There were also gains for Royal Bank of Scotland, 2.2p to 40.4p, and Lloyds Banking Group 4.4p to 72.4p.
Housebuilders were attracting selective support amid hopes that the outlook for the sector had started to improve. The latest survey from the Land Registry provided evidence that the fall in house prices had started to slow. Barratt Developments put on 15½p at 174p, and Redrow 16¼p at 212p. Persimmon also added 16¾p at 380¾p, despite whispers it may turn to shareholders for more cash soon.
TUI Travel, up 8½p at 256¾p, benefited from an upgrade by Charles Stanley which has raised its rating from hold to accumulate. Rival Thomas Cook also put on 14¾p at 236½p.
Shares in Minerva Resources were suspended at 0.7p on news of a bid approach from rival Dwyka Resources. The two sides are locked in talks about the terms of an all-share offer that would value Minerva at not less than 1p a share. Such a bid would value Minerva at £1.5 million. Dwyka firmed 0.01 to 0.14p.
