LONDON (Dow Jones) - Investors in London warmed to Anglo American's restructuring plan on Wednesday, with BP's downturn from its third-quarter results short-lived after a Merrill Lynch upgrade.

Anglo American (AAUK) gained 4.2% after it said it will return up to $1 billion to shareholders. reduce its shareholding in gold business AngloGold Ashanti, may separate its paper and packaging business and will refine the portfolio of its industrial minerals division Tarmac.

BP PLC (BP) meanwhile rose 2.3% after Merrill Lynch upgraded oil giant to buy from neutral, saying the recent sell-off in the shares was overdone.

The broker said it is encouraged by strong organic free cash generation, capital discipline and disposals, which underpin a positive cash recycling theme in 2006 and beyond. Merrill also said it sees a long-term opportunity in the company, saying it has a large bank of exploration options and significant long- term resource potential, notably in Alaska and Russia .

BP on Tuesday posted third-quarter profit at the low end of analyst forecasts.

FTSE 250 component Lonmin tacked on 1.1% after it said fourth-quarter platinum production will allow it top its annual production goals.

The companies also were lifted by overnight commodity price gains, sending peers such as oil major Royal Dutch Shell (RDSA) and miner Rio Tinto PLC (BHP) higher as well.

More broadly, the FTSE 100 index rose 0.6% at 5,216, and European markets also advanced.

Of other stocks in focus, Prudential plc (PUK) fell 0.8% following the U.K.- based insurer's long-awaited strategy review. It said it was holding onto its 79% holding in Internet bank Egg as well as Jackson National Life insurance operation in the U.S. Prudential third-quarter new insurance business rose 16%.

Egg was down 0.2% following the Prudential news, as well as its third-quarter results, where it swung to a third-quarter profit of 11.1 million pounds.

Cambridge Antibody Technology (CATG) rose 4.7% following the settlement of its dispute with Abbott Laboratories (ABT) over arthritis drug Humira license payments.

(END) Dow Jones Newswires

10-26-05 0700ET Copyright (c) 2005 Dow Jones & Company, Inc. Copyright (C) 2005 Dow Jones & Company, Inc. All Rights Reserved.