Sept. 9 (Bloomberg) -- U.K. stocks climbed, with the benchmark FTSE 100 Index closing above 5,000 for the first time in almost a year, as gains by oil companies and airlines offset concern a six-month rally has outpaced earnings prospects.

BG Group Plc, the U.K.’s third-largest oil and natural gas company, added 3.8 percent after saying the Guara oil field, of which it owns 30 percent, contains 1.1 billion to 2 billion barrels of oil. British Airways Plc led airlines higher after Commerzbank AG recommended investors increase holdings. Tesco Plc rose 1.3 percent as U.K. consumer confidence climbed.

The benchmark FTSE 100 Index added 1.2 percent to 5,004.3, the highest since Sept. 26. The FTSE All-Share Index also rose 1.2 percent and Ireland’s ISEQ Index gained 1 percent.

The benchmark for U.K. equities has rallied 42 percent since March 3 as earnings at companies from Goldman Sachs Group Inc. to Roche Holdings AG and an unexpected return to growth in the French and German economies boosted global stock markets. The six-month rally has pushed the FTSE 100 price-to-earnings ratio to 70.9, the most expensive level in seven years, according to weekly estimates compiled by Bloomberg based on reported results.

“The growing feeling of optimism surrounding global economies and the re emergence of M&A data this week have given stock markets a shot in the arm so far this week,” wrote Jimmy Yates, head of equities at CMC Markets in London. “Traders will now be looking for the FTSE to sustain its gains above the key level. September usually leaves investors worried due to its annual slump but this year has seen a rally that looks set to continue.”

BG Group

BG Group added 3.8 percent to 1,095 pence as it said the deepwater Guara field in the Santos Basin off Brazil contains between 1.1 billion and 2 billion barrels of oil, which will help double the country’s proven reserves.

“It is clear that the Santos Basin pre-salt will make a very material contribution to the production and cash flow of BG Group for many years to come,” BG Chief Executive Officer Frank Chapman said in a statement today.

John Wood Group Plc rallied 5.5 percent 300.6 pence. The U.K.’s largest oilfield-services provider was raised to “overweight” from “neutral” at JPMorgan Chase & Co.

British Airways gained 5 percent to 211 pence. Europe’s third-largest airline was given an “add” recommendation in new coverage at Commerzbank.

Easyjet Plc advanced 2.2 percent to 353.1 pence. Europe’s second-largest discount airline was given a “buy” recommendation in new coverage at Commerzbank. Ryanair Holdings Plc jumped 2.7 percent to 3.389 euros in Dublin. Europe’s largest low-cost airline was initiated with a “hold” recommendation.

Tesco

Tesco, the largest U.K. food retailer, increased 1.3 percent to 381.3 pence. Home Retail Group, the owner of Argos stores, gained 0.6 percent to 329.7 pence.

U.K. consumer confidence rose to the highest level in more than a year in August as signs mounted that the economy is emerging from the worst recession in a generation, Nationwide Building Society said.

GKN Plc climbed 3.5 percent to 118.6 pence. The U.K. maker of car parts for Bayerische Motoren Werke AG and aircraft components for Airbus SAS was given a new “buy” recommendation at UBS AG with a share-price estimate of 135 pence.

A gauge of companies involved in the automobiles and parts sector posted the biggest increase among 19 industry groups in the Stoxx 600 after Renault SA Chief Executive Officer Carlos Ghosn said the worst of the financial crisis is over.

Lonmin Plc slipped 2.8 percent to 1,664 pence. Bank of America Corp. downgraded the shares to “neutral” from “buy” and said that a bid for the third-biggest platinum producer by Xstrata is “not a sure thing.”

To contact the reporters on this story: Adam Haigh in London at ahaigh1@bloomberg.net; Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.

Last Updated: September 9, 2009 12:04 EDT