LONDON'S blue-chip index was in the green on Tuesday, with investors buoyed on indications that the US and China are making progress with trade talks.

The FTSE 100 closed up 85.40 points, or 1.27 per cent, at 6,806.94, while Germany's DAX rose 1.9% and France's CAC 40 increased 1.71%.

Fiona Cincotta, senior market analyst at City Index, said: "Signs that the Sino-US trade talks are making progress helped markets across the board.

"President (Donald) Trump called Tuesday's phone discussions between the US trade representatives and China's vice president 'very productive' and said to watch out for an important announcement.

"This is just the kind of news markets needed to hear to calm other ongoing tensions - the abandoned Brexit vote in the UK, protracted protests in France and swelling fears of an economic slowdown in the US."

Oil prices were also lifted on expectations of a US-China trade deal, with a barrel of Brent crude trading up 1.37% at $60.58 (£48.39).

Meanwhile, the pound slipped on news that Prime Minister Theresa May could face a vote of no confidence.

Neil Wilson, chief market analyst at Markets.com, said: "Sterling has slumped lower again, retreating to fresh 20-month lows on the 1.25 level against the dollar amid reports that Conservative MPs have sent the requisite 48 letters to trigger a vote of no confidence.

"The hardline Brexit ERG group is reported to have the required numbers - although this remains rumour at present and therefore we must treat the news with some degree of caution."

The pound was down 0.5% against the US dollar at 1.249, having fallen to its lowest level since April 2017 on Monday when a key parliamentary vote on the EU withdrawal agreement was deferred. Sterling was flat versus the euro at 1.105.

In corporate news, WPP is axing 3,500 jobs worldwide under plans to slash costs by £275 million a year as it looks to turn around its fortunes.

The move will largely affect administration roles as the advertising giant looks to merge 100 offices and shut a further 80 sites.

WPP shares closed up 39p to 844p.

Equipment rental company Ashtead said it expects to beat its full-year targets after positive growth in the US during the first half.

Rental revenue was up 18% to £2.07 billion, while underlying pre-tax profits jumped 19% to £633m.

Ashtead shares rose 57.50p to 1,664p.

Shares in troubled retailer Carpetright rose 0.95p, nearly 6%, to 17.3p despite unveiling stinging losses for a period in which it underwent a dramatic store closure programme.

For the 26 weeks to October 27, the group made a loss before tax of £11.7m.

Underlying earnings swung to a loss of £1.7m compared with a profit of £8.6m this time last year.

The biggest risers on the FTSE 100 were Anglo American up 56.60p to 1,661.6p, Wood Group up 30.60p to 644.2p, WPP up 39p to 844p, and Melrose Industries up 7p to 153.3p.

The biggest fallers on the FTSE 100 were Standard Life Aberdeen down 4.35p to 224.85p, Randgold Resources down 114p to 6,906p, Lloyds Banking Group down 0.56p to 52.33p, and RSA Insurance Group down 3.4p to 499p.