Insurers and oil stocks ensured the London market regained its feelgood factor yesterday and buried the memories of two straight weeks of losses.

Aviva, Legal and General and Friends Provident all advanced after financial services group Old Mutual resolved to tackle issues in the way of a potential takeover of life insurer Skandia.

The sector was also lifted by investors taking the view that UK insurers had limited exposure to US claims after Hurricane Katrina blazed a trail of destruction across southern states.

And with buoyant oil prices propping up the share prices of BP and Royal Dutch Shell, the FTSE 100 Index ended the session 27.7 points higher at 5255.8.

A barrel of crude oil climbed above $70, even beating the previous day's performance when it breached the $70 mark before slipping back.

Figures from the Bank of England showing that credit card borrowing rose at its slowest pace for more than four years were also at the forefront of thoughts in the City. Although the data did little to suggest a recovery in economic confidence, they raised hopes that interest rates could be lowered in the coming months.

Insurers attracted interest in the wake of the statement from Old Mutual about its talks over a potential £3bn-plus bid for Skandia.

Aviva rose 7p to 611.5p, Legal and General ticked up a penny to 110.5p and Friends Provident gained 0.75p to 172.25p to follow the example of Old Mutual - up 2.5p at 138.5p.

Oil major BP benefited from the high price of crude and the fact that Hurricane Katrina had not wreaked as much havoc as previous storms, rising 12p to 622p. Gains by Royal Dutch Shell were more muted, at 18p to 1842p, after one of its platforms in the Gulf of Mexico appeared to be damaged and personnel had to be evacuated from it.

Retailers struggled late in the session as a CBI survey that found firms were at their most pessimistic for seven years nagged at investors.

Boots was a penny higher at 615p, but Marks & Spencer slipped 1.5p to 355.75p and Dixons eased 0.25p to 150p. B&Q owner Kingfisher fell 3.75p to 251.75p after a study from Verdict Research highlighted continued pressure from Homebase and Argos in the DIY market.

Property group Hammerson did the Footsie a favour after it said it was optimistic about future rents in the retail sector and demand for office space. Its shares rose 8p to 887p and British Land added 17p to 882p.

Ladbrokes owner Hilton advanced two per cent, or 7.25p, to 317.25p after broker Morgan Stanley upped its target price. The positive assessment also helped rival William Hill to improve 8p to 579p.

Elsewhere, Choices Video chain owner Home Entertainment dropped three per cent, or 4p, to 118.5p after its performance over the past year was hurt by piracy of DVDs and few Hollywood blockbusters.