By Sarah Turner

LONDON (Dow Jones)--Banks and commodity-sector stocks helped London-listed shares to sharp gains on Wednesday, marking the third straight advance for stocks and lifting shares back to levels not seen since the start of July.

Overall, the FTSE 100 closed up 2.6%, or 108.78 points to 4,346.46. Other European shares also climbed, along with U.S. stocks and Asian shares.

The FTSE 100 index is now back at levels not seen since early July.

The gains came as results from U.S. technology giant Intel out late Tuesday beat analyst expectations on an adjusted basis and added to wider optimism about second-quarter earnings.

Earlier Tuesday, U.S. investment bank Goldman Sachs reported forecast-beating quarterly earnings, helping the European banking sector to close the day with sharp gains.

Banks advanced again in London on Wednesday, with shares of HSBC Holdings (HBC) up 4% and Barclays (BCS) up 4.4%.

Also in the financial sector, shares of London Stock Exchange climbed 3.6%.

Revenue for the first quarter ended June 30 dropped 8% to 161.9 million pounds ($263 million), as the average daily value traded on the SETS order book dropped 38%. Average trading volume on Borsa Italiana rose 13%.

Still, LSE's revenue beat consensus expectations by around 7%, noted analysts at Arden Partners.

"It beat post-trade services forecasts by 23%, and information services by 20%, with capital markets missing forecasts by 2.8%," the analysts said.

There was also some better news on the economic front, as the number of Britons claiming jobless benefits in June rose at the slowest pace in more than a year. Still, the overall number of unemployed increased at a record quarterly pace in the three months ending in May.

Mineral extractors also higher

Mining shares also advanced, with Rio Tinto (RTP) climbing 4.2% as it released second-quarter production figures and said it expects higher steel demand from China to continue.

Iron-ore production rose 8% in the second quarter compared to a year ago, Rio Tinto said in affirming its output target for 2009 remains about 200 million tons.

Recovery in Chinese steel demand is expected to carry into the second half of the year, the firm said.

Analysts at Investec Securities reacted favorably. "Rio Tinto has reported a good set of production numbers with the key drivers of iron ore, coal and copper exceeding our expectations," they told clients.

"Today's good numbers give some scope for us to upgrade out fiscal-year iron and coal production forecasts," the analysts added.

Also in the mining sector, shares of rival BHP Billiton (BHP) advanced 3.8%, while Xstrata rose 8.4% and Vedanta Resources gained 3.6%.

In commodities, metal futures were firm and light sweet crude-oil futures traded back over $60 a barrel.

Oil producers were also strong, with shares of BP (BP) up 2.5%.

Outside the FTSE 100, shares of Burberry underperformed the broader market, up just 0.1%.

The luxury-goods retailer said that total revenue rose 8% in the three months to June 30, its fiscal first quarter. This was just ahead of analyst expectations for a 7.6% growth.

However, that was slower than the pace seen in recent quarters: Burberry's sales rose by 14% in the firm's fiscal fourth quarter and by 30% in its fiscal third quarter.

Retail comparable sales were flat on a year-on-year basis, while total underlying retail sales increased 12%. Customers reacted positively to spring/summer ranges, the firm said.

"This is the least important quarter for Burberry so we don't expect any major changes to forecasts today," noted analysts at Barclays Wealth.

-Sarah Turner; 415-439-6400; AskNewswires@dowjones.com