Britain's FTSE 100 index closed 1.2 percent higher on Thursday as oil shares ran ahead after an unexpectedly steep drop in U.S. crude stockpiles, and banks gained after a reassuring trading statement from HSBC . Insurer Royal & Sun Alliance was a FTSE frontrunner, rising 3.5 percent to 117-1/2 pence on talk that it might be the latest UK company to be snapped up in a recent wave of bids for British assets. Traders could give no specifics of potential bidders, but the shares were active last month on talk French rival Axa has the company in its sights. "There's talk about who the next UK bid target is going to be, and RSA has been mentioned. We haven't had a big bid for a while, and people are thinking there's more to come," said one trader. The FTSE 100 closed 62.9 points higher at 5,486.1, grabbing back most of Wednesday's 68-point fall, which had been triggered by fears that strong U.S. economic data would translate into a tougher U.S. stance on interest rates. Merger and acquisition activity jumped back onto the UK agenda early on Thursday after insurer Prudential offered to buy out the minority of shares it does not already own in online bank Egg . Shares in midcap stock Egg, which Prudential floated five years ago and has failed to sell, closed up 14 percent. --More 2114 Local Time 1814 GMT