By Kit Rees and Alistair Smout
LONDON (Reuters) - Britain's top share index rallied on Thursday, rebounding from the previous session's falls after a drop in the dollar boosted commodity prices and gave a lift to mining and oil shares.
Britain's FTSE 100 was up 1.1 percent at 5,898.76 points at its close, snapping a three-day losing streak that had seen the index shed 4 percent.
The rally came as expectations for a rate hike from the U.S. Federal Reserve evaporated. That sent the dollar tumbling, making dollar-priced crude oil and metals cheaper for holders of other currencies.
The rally in oil prices came even after data showed the crude market remained oversupplied.
FTSE 350 Oil and Gas shares surged 5.6 percent. Adding the most points to the index was Royal Dutch Shell (L:RDSa), up 6.1 percent and contributing over 13 points to the FTSE 100's rise.
Shell reported results in line with consensus predictions. While it reported its lowest annual income in at least 13 years, it follows a week where the likes of BP (L:BP) and Exxon Mobil (N:XOM) reported earnings that disappointed analyst expectations.
"Pessimists might point to a collapse in Shell's fourth quarter profits by some 44 percent. However, optimists would point to the fact that BP saw profits collapse by 91 percent, so comparatively speaking, it's a pretty solid performance," said Alastair McCaig, market analyst at IG.
The FTSE 350 Mining index jumped 11.2 percent, its biggest daily gain since March 2009, with BHP Billiton (L:BLT), Antofagasta (L:ANTO), Glencore (L:GLEN) and Rio Tinto (L:RIO) up 10.3-16 percent.
Anglo American (L:AAL) surged over 19.9 percent, its biggest daily gain since November 2008.
"It would appear that an increasing faction views the sector as having seen the worst, on its way back from oversold and on the right track in terms of painful measures to correct structural issues," Mike van Dulken, head of research at Accendo Markets, said in a note.
The top faller on the UK blue-chip index was AstraZeneca, dropping 6.1 percent after it warned that revenue and earnings would fall this year due to the arrival of cheap generic rivals to its cholesterol fighter Crestor.
Soft drink bottling company Coca Cola HBC also fell, sliding 5.6 percent after Barclays (L:BARC) downgraded its rating to "underweight" on concerns over its emerging market exposure.