London close: Oil, metal price rises inspire resources-led rally

London shares closed higher on Wednesday led by a strong showing in the resources sector on the back of rising oil and metals prices.

Miners helped to revive a the session as better-than-expected UK industrial output figures were offset by disappointing Chinese trade data and the FTSE 100 traded in the red earlier in the day.

Industrial output grew 1.6% year-on-year in April, beating forecasts for a 0.3% decline and following a 0.2% drop in March, the Office for National Statistics revealed.

Manufacturing production edged up 0.8% on the year, compared to forecasts for a 1.3% decrease and after a 1.9% fall in March.

Earlier, official data showed China's global trade surplus widened to $49.98bn in May from April's $45.6bn, missing estimates of $55.70bn.

Exports fell 4.1%, compared to analysts’ forecast for a 4% drop and the previous month’s 1.8% slide. Imports dipped 0.4% in May but it was an improvement on April’s 10.9% plunge and better than expectations for a 6.8% decrease.

At the same time China's central bank slashed its forecast for exports to a drop of 1% this year compared to a previous estimate of 3.1% growth. However, the People's Bank of China said the economy will still grow 6.8% this year as it sees domestic recovery remaining on track.

Oil prices continued to rally after data showed a fall in US crude stockpiles, helping to ease concerns on the global supply glut. Continued supply disruptions in Nigeria also bolstered prices.

Brent crude jumped 1.11% to $52.07 per barrel and West Texas Intermediate increased 1.08% to $50.91 per barrel.

On the corporate front, Sainsbury's jumped after reporting a better-than-expected 0.8% like-for-like drop in first quarter sales.

Fellow grocer Tesco gained after Sky News reported the group may announce this week a sale of its Turkish unit Kipa and British restaurant chain Giraffe.

Royal Dutch Shell edged higher as RBC Capital raised its target price on the stock to 2,000p from 1,900p and reiterated an ‘outperform’ rating after the oil producer announced plans for more asset sales and cost-cutting over the next few years.

Mining stocks were also on the rise as metal prices gained. Fresnillo, Antofagasta, Randgold Resources and Anglo American rallied.

3i Infrastructure jumped after it confirmed the successful completion of a £385m capital raise, having finished its open offer, placing and intermediaries offer and increased the initial target size from £350m.

WH Smith declined after it said like-for-like sales in the 14 weeks to 4 June 2016 as High Street sales fell, offset slightly by an increase in sales at the travel business.

Travel stocks were under the cosh, including TUI AG, easyJet and Thomas Cook, on the prospect of higher fuel costs following the recent rally in oil. A car bombing on Wednesday in the popular holiday destination of Turkey also weighed on sentiment in the sector.