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UK stocks close at six-week high as commodity stocks rally

People walk through the lobby of the London Stock Exchange in London

By Anisha Sircar

(Reuters) - The UK's FTSE 100 hit its highest level in nearly six weeks on Tuesday as commodity stocks rallied ahead of a key U.S. Federal Reserve policy meeting, while oil giant BP rose as it reported bumper profits and expanded its share buyback plan.

The blue-chip FTSE 100 rose 1.3% and the domestically oriented FTSE 250 also gained 1.3%, with both the indexes hitting their strongest level since September 22.

Shares of BP ended 1.4% higher after it said it had more than doubled its quarterly profit to $8.15 billion year-on-year and expanded its share buybacks by $2.5 billion amid calls to increase taxes on the energy sector.

"This phenomenal quarter of earnings isn't going to ease calls for windfall taxes at a time when governments are facing fiscal black holes requiring difficult decisions on taxation and spending," said Craig Erlam, senior market analyst at OANDA.

The UK's energy and mining shares climbed 1.9% and 4.9%, respectively, tracking stronger commodity prices.

The FTSE 100 posted gains in October, having recouped some of the sharp losses from earlier in the month after former Prime Minister Liz Truss's unfunded tax cut plans spooked financial markets.

Britain's new Prime Minister Rishi Sunak is examining spending cuts and tax rises ahead of the Autumn Statement later this month.

"October proved to be a much better month after the disastrous performance over Q3, aided by hopes of a pivot from central banks, stabilisation in Europe's energy situation and an end to UK market turmoil, but we shouldn't get ahead of ourselves," strategists at Deutsche Bank wrote in a note.

Focus was on U.S. and UK policy decisions on Wednesday and Thursday, respectively, with both the central banks expected to raise rates by 75 basis points.

British house prices in October recorded their first monthly fall since July 2021, declining 0.9%, as the market was hit by turmoil during Truss's short-lived premiership.

Ocado Group jumped 38.6%, recording its best day in nearly five years, after the online supermarket group announced a partnership deal with Lotte Shopping.

(Reporting by Anisha Sircar, Susan Mathew and Sruthi Shankar in Bengaluru; Editing by Sherry Jacob-Phillips, Saumyadeb Chakrabarty, Alexandra Hudson)