By Simon Kennedy

LONDON (Dow Jones)--U.K. stocks gave up some of their earlier gains but still ended higher Tuesday as natural resources companies led a rebound from the previous session's losses.

Mining stocks rose, with BHP Billiton (BHP) gaining 1% and Anglo American adding 0.4% as commodity prices strengthened.

Rio Tinto (RTP) added 2.4% after it also announced a deal to sell its Alcan Composites business to Switzerland's Schweiter Technologies for $349 million.

Oil and gas heavyweights BP (BP) and Royal Dutch Shell (RDSA) both rose 0.7% as oil prices climbed.

The October-dated light-crude contract climbed $1.80 to $71.51 a barrel, helped by a weak performance by the dollar against its major rivals.

The U.K.'s main FTSE 100 index rose 8.24 points, or 0.16%, to 5,142.60. Other European markets also posted solid gains.

Mervyn Douglas, who runs the U.K. Focus Fund at Aviva Investors, said he prefers equities to cash and government bonds. But he also said the market is nearing an end to the phase where early-stage cyclicals outperformed.

One of his concerns is that strategists are bringing GDP and earnings forecasts higher but not moving up interest-rate-hike expectations. "So far it's a perfect Goldilocks world, but I don't think that's sustainable."

Among other gainers, shares in Carnival (CCL) rose 5% after it reported a nearly 20% drop in quarterly profit, but still topped market expectations and lifted its earnings forecast for the year.

Merrill Lynch also added the cruise-ship operator to its "Europe 1" list of preferred stocks just ahead of its results.

The broker said it sees "significant opportunities" for net-revenue-yield improvement and believes the company offers an attractive way of playing a U.S.-led consumer recovery.

Construction stocks were volatile after the Office of Fair Trading said it fined 103 firms 129.5 million pounds ($209.7 million) for alleged collusion on building contracts between 2000 and 2006.

Shares in Kier Group and Carillion dropped more than 2% and Balfour Beatty fell 0.7% after they all received bigger-than-average fines.

Among other movers, Misys rose 2.6% after UBS upgraded the software company to buy from neutral, saying the stock has underperformed compared to peers such as Sage and Logica .

Pharmaceuticals group Shire also benefited from a broker upgrade after it was lifted to hold from underperform by Jefferies International, which cited the company's forecast for earnings-per-share growth of more than 20% from the second quarter of 2010.

Shares in the pharmaceuticals company rose 1.9%.

Defensive stocks such as utilities were also among the weaker performers, with water companies Severn Trent and United Utilities both dropping more than 1%.

Services Desk; Dow Jones Newswires; +44-20-7842-9319/9274