BP results, miners boost Britain's blue-chip share index

British blue chip shares hit their highest in more than two months on Tuesday after heavyweight BP doubled its annual profit and miners rallied on higher iron ore prices, feeding into an upbeat mood on global markets.

London's main index rose 1.1 per cent by 09:43 GMT, hitting levels not seen since December 3 and extending gains as sterling weakened.

The index of midcaps was more subdued, up just 0.1 per cent.

A dip in the pound generally boosts the main index, which earns a lion's share of its earnings abroad. All sectors on the FTSE 100 were in the black by 09:48 GMT.

Sterling's weakening, to near two-week lows, was not good news for domestically oriented companies, however, as it came in reaction to a survey showing dominant services sector firms reported job cuts for the first time in six years.

That signalled further risks to Britain's economy although retailers were lifted by data showing a pickup in consumer spending last month.

Asian markets extended gains on Tuesday as overnight strength on Wall Street and the US Federal Reserve's cautious turn supported appetite for riskier assets.

On Britain's main index, oil major BP gained 4.2 per cent — on course for its best day since September 2016 — after full-year numbers topped expectations.

Mining stocks hit their highest since late June last year after Brazil ordered top producer Vale to shut its tailings dams following the deadly incident last week, raising concerns about falling output. Singapore iron ore futures were up 3.4 per cent overnight.

Online retailer Ocado, among last year's best performing stocks, shed early losses to rise 1 per cent despite results showing investment hit earnings.

Drugmaker Indivior, however, sank as much as 25 per cent on news of a loss in its fight against generic competitors in a US court. 

Retail stocks were in favour as a survey showing British consumers picked up the pace of their shopping in January offered some respite to a sector that suffered its worst Christmas in a decade. Marks & Spencer was 1.2 per cent higher. 

Prime Minister Theresa May headed to Northern Ireland on Tuesday, promising to find a solution to the border issue at the centre of her Brexit headaches.

German Chancellor Angela Merkel on Monday called for a "creative" compromise to future Irish border arrangements on Monday and she said in Tokyo that there was "still time" for a solution.

Chief EU Negotiator Michel Barnier said the EU would not reopen its Brexit Withdrawal Agreement, but that alternatives to the controversial Irish backstop could be worked on after Britain leaves the bloc.

"We have been mercifully free of any Brexit discussion so far but the clock is ticking on that... I am not sure they see either side giving way which would make life a lot more difficult in the near term," said Chris Beauchamp, analyst at IG.

"I think we are having a calm before the storm which could easily start from next week."

If May fails to get parliament's approval for a revised deal on February 13, lawmakers will vote on next steps on February 14.