By Julien Ponthus and Helen Reid
LONDON (Reuters) - Strong oil prices helped Britain's top share index seal its highest ever closing level on Thursday while online grocery retailer Ocado rocketed up 44 percent after signing a deal with U.S. grocer Kroger (NYSE:KR).
The FTSE 100 (FTSE) climbed 0.7 percent to close at 7,787.97 points, just a whisker away from its record intraday high of 7,792.56 points hit in mid-January.
The mid-cap FTSE 250 index (FTMC) hit a new record high, surpassing its previous mid-January record, up 0.9 percent on the day. For both indices it marked a full recovery from the turmoil which had dented markets globally since January.
Heavyweights Royal Dutch Shell (L:RDSa) and BP (L:BP) drove the biggest gains, up 2.1 percent and 1.4 percent respectively as oil prices broke the $80 a barrel barrier.
The star of the session was Ocado (L:OCDO), whose shares shot up as much as 81 percent in intra-day trading before closing up 44 percent after it announced that U.S. retailer Kroger would use its technology.
"We think this is just about as positive a deal as could have been expected to have been announced by Ocado," analysts at Barclays (LON:BARC) said, adding "the company now has an extremely credible partner in the largest grocery market in the world."
"This does not preclude other deals outside of the U.S. and given Kroger's size, they could commit to materially more customer fulfilment centres than the 20 announced, in our opinion," said Goldman Sachs (NYSE:GS) analysts.
Gambling stocks were initially bruised by the British government's decision to cut the top stake on betting terminals to 2 pounds.
But they ended the day higher as investors expressed relief the regulatory uncertainty was over, and looked instead to the potential benefits from a U.S. high court ruling which could lead to states legalising sports betting.
Ladbrokes (LON:LCL) Coral parent GVC (L:GVC) and William Hill (L:WMH), which operate some of the 182,000 gaming machines in Britain, recovered to rise 5 percent and 4.2 percent respectively.
Large-cap gambling stock Paddy Power Betfair rose 1.9 percent.
"Whilst £2 max stakes is a negative for the sector, if the implementation date is pushed back past 2020, online taxes come in later and the impact to EBITDA is less bad than feared, then there may be a sense of relief today," said Barclays analysts.
Leading the FTSE 100 was Experian (L:EXPN), the world's biggest credit data company, adding 5.6 percent after saying 2018 would be another year of growth and reporting revenues for its full financial year grew more strongly than expected.
Royal Mail (L:RMG) on the other hand tumbled 7.2 percent after it warned the decline in letter volumes may come in at the higher end of its forecast range while the British holiday company declined 3.1 percent after reporting first-half earnings.
Among smaller companies, Mothercare (L:MTC) jumped 24.4 percent after the struggling mother and baby products retailer said it would ask investors for 28 million pounds as part of a restructuring plan that would see a further 50 stores close.