BP and miners push FTSE higher in morning deals

Solid gains by BP and other heavyweight resources groups lifted the FTSE 100 1.5% higher in opening deals.

The FTSE 100 was 70 points higher at 4893.

A British Chambers of Commerce survey pointed to strong GDP growth of around 0.6 - 0.7% in the second quarter, but warned sluggish growth in the services sector is a serious concern.

The services sector accounts for around 75% of the UK economy and yesterday June services sector data disappointed adding to worries about how government cutbacks will affect its growth in the months and years ahead.

The news has been better in the manufacturing sector, but around 80% of manufacturers are now reporting that the cost of raw materials is increasing, adding to price pressures, the BCC said.

US markets were closed yesterday for Independence Day.

Asian markets were weaker in early deals as ex-IMF economist Ken Rogoff said the collapsing Chinese property market will hurt the country's banking system.

The Nikkei fell as much as 1.8% but was 0.77% higher at 9338.04 by the close of trade. The Shanghai Composite also broke its losing streak to climb 1.92%, having hit a 16 month low yesterday.

In UK company news, BP led the pack higher. Shares in the oil giant rose 4.31%, adding to gains yesterday as the group told the Financial Times it will not issue new shares.

There had been reports over the weekend that BP was looking to bring a strategic Middle Eastern investor on board to help shore up its finances in the wake of the Deepwater Horizon disaster in the Gulf of Mexico. Analysts said it didn't need the cash and BP agreed, saying it can meet the costs of the spill without issuing new shares.

RBS upgraded the shares to 'buy' from 'hold', saying the current price is discounting an unrealistically pessimistic scenario. The group has a new 455p price target for BP

Exploration group Tullow Oil added 3.17% to £10.74 after its trading update. The group said it will complete the sale of its Ugandan assets soon and outlined a busy drilling program for the rest of the year.