A bid approach for Exel and positive results from drinks maker Diageo helped the FTSE 100 Index make strong gains for the third session in a row yesterday.

Plans by Cadbury Schweppes to sell its European drinks operation added to the mix, as the Footsie climbed 31.6 to 5328.5 by the close.

Energy stocks again underpinned the latest improvement as oil prices near $70 a barrel enabled market heavyweight Royal Dutch Shell to lift 16p to 1897p and rival BP to rise by 5p to 637p.

But the main excitement of the session concerned deal-making after news of an approach from DHL owner Deutsche Post pushed Exel up by 17 per cent - a jump of 173p to 1178p. That valued the logistics group at more than £3bn, with potentially more to come if the likes of UPS or TNT enter the fray.

Cadbury Schweppes also had a warm reception for its plans to sell a division that includes Oasis and Orangina, which is valued at more than £1bn.

The confectionery group, which rose nearly three per cent, or 14p, to 561p, was also helped by positive sentiment following the results announcement from drinks company Diageo.

The Guinness owner climbed two per cent, or 13p, to 805p, after revealing signs of an end to the downturn in sales of its ready-to-drink products, such as Smirnoff Ice. The company also posted a two per cent rise in annual operating profits and proposed a £1.4bn share buyback programme this financial year.

Others in the sector to benefit included Enterprise Inns, which rose by 28p to 854p, and brewer SABmiller, which was up 20p at 998p.

Oil prices were supported by the loss of production in the US following Hurricane Katrina, which also led investors to buy shares in companies that could benefit from construction and relief work in southern states.

Building materials company Wolseley advanced three per cent, or 31p, to 1159p, while in the second tier, temporary power specialist Aggreko climbed eight per cent, or 15p, to 225p. Plant hire group Ashtead was up 8p at 130p.

On the downside, Whitbread topped the Footsie fallers board after sales figures showed a weakening trend. Shares fell 17p to 977p, a drop of two per cent.

Car rental group Avis Europe achieved a much-needed rise after announcing progress on its recovery plan. Shares rose 3p to 53p, even though the company posted a sharp fall in half-year profits.

Budget airline easyJet rose 3p to 295p as investors took a positive view of the appointment of former RAC boss Andrew Harrison as its new chief executive.

But retailer Whittard of Chelsea slumped 14 per cent - or 12p to 75p - after potential takeover bidders walked away from talks to buy the company. The stock fell ten per cent last week following a gloomy trading update.