Bargain hunters,oil stocks power FTSE

* Energy stocks firm on Libya hopes

* ICAP,IG Group helped by market volatility

Integrated oil stocks added the most points to the blue chip index,with sentiment surrounding the sector lifted as Muammar Gaddafi’s rule appeared to be crumbling.

Royal Dutch Shell climbed 3.1 percent,while BP and BG Group notched up respective gains of 2.2 percent and 1.9 percent.

Oil services firms,which traders said could benefit from maintenance work in the country,found support. Petrofac firmed 3.9 percent after it posted a forecast-beating first-half profit and said it was confident demand from national oil firms would continue to drive future growth.

Midcap peer Lamprell advanced 5.6 percent.

Essar Energy ,the India-focused refiner and power generator,dropped 4.1 percent after reporting its results.

While its earnings rose 49 percent in the first half of the year on the back of higher refinery margins,the company said it continued to battle delays to regulatory approvals.

The FTSE 100 was up 123.55 points,or 2.5 percent,at 5,164.31 by 1144 GMT,after a torrid week in which it sank 5.2 percent on concerns the global economy could be heading back into recession.

Traders said that bargain hunting was helping to drive the index’s gains.

We did go below 5,000 (near the open) and I think a lot of people have taken the view that it’s probably fairly cheap given the range of recent days — the lowest it’s been is around 4,800 and there was a very sharp rebound off that,Michael Hewson,analyst at CMC Markets,said.

Traders said the extreme market turbulence seen lately has benefited inter-dealer broker ICAP ,up 5.7 percent and at the top of the blue-chip leader board.

Indeed,midcap spread-betting firm IG Group rose 5 percent after it said recent volatility and heavy trading volumes gave its sales a boost.

Interdealer broker Tullet Prebon firmed 2.9 percent.

MINERS HIGHER

Miners were also behind the FTSE 100’s gains.

Randgold Resources climbed 4.2 percent as spot gold rallied,with the bullion spurred by a flight to safety.

A target price hike from Citigroup also helped,with the broker lifting its gold price forecasts to accommodate the impact global financial tension is having on gold.

(Randgold) traded at a valuation parity with Fresnillo 12 months ago,but the Ivory Coast problems saw it move to a 35 percent discount. The Ivory Coast issues have been resolved,but it still trades at a 25 percent discount,Citi said in a note.

On the second line,Petropavlovsk ,which Citi upgraded to buy,climbed 6.8 percent,while African Barrick Gold and Centamin Egypt rose 2.6 percent and 5.6 percent after the broker hiked their target prices.

Anglo American added 1.7 percent as newspaper reports said it was considering a bid for Macarthur Coal to rival an earlier offer from U.S. coal company Peabody Energy .

With global growth at the forefront of investors’ minds,the meeting of central bankers in Jackson Hole,Wyoming,on Friday will be keenly awaited. It was at the same meeting last year that Federal Reserve Chairman Ben Bernanke first hinted at a second round of quantitative easing (QE) to help spur the U.S. economy,though it is considered unlikely that he will announce further quantitative easing this time.

Don’t rule out some form of positive message from Jackson Hole even if it isn’t additional QE,Peter Dixon,economist at Commerzbank,said.