Mumbai, May 28: The markets rallied to snap a six-day long falling streak and lifted the benchmark Sensex by nearly 250 points on reports of government denial of imposing any tax to make up for the losses of oil companies.

The Bombay Stock Exchange 30-share index ended the day at 16,525.37, a rise of 249.78 points, or 1.53 per cent, over its previous close.

The BSE barometer touched the intra-day low of 16,217.78 points after a good start at 16,358.62 points.

Similarly, the 50-share S&P CNX Nifty of the National Stock Exchange shot up by 58.55 points, or 1.2 per cent, to close at 4,918.35 from its last close.

Meanwhile, global crude oil traded around 129 dollars a barrel in Asian trade while European markets staged a smart recovery in their early trade.

Marketmen said Finance Ministry's statement today that reports about certain new tax proposals to offset oil refiners under recoveries due to global crude prices are totally "baseless" and "speculative" in nature came as a shot in the arm for the sagging markets.

The market was volatile a day ahead of the expiry of derivatives May contract on Thursday with investors' focus on rollover of positions to next series, they added.

Indices in France, Germany and UK were up by 0.16 per cent to 1.02 per cent around mid-afternoon trade at home while Asian markets were mixed at close.

FMCG, IT, Metal and Bank shares were in the forefront with impressive gains.

Ambuja Cements (up 6.66%), ITC (6.19%), Hindalco Industries (5.96%), Tata Consultancy Services (4.46%), Tata Steel (4%) and State Bank of India (3.12%) were the chief contributors to the Sensex rise.

BHEL (down 2.78%), Larsen & Toubro (1.25%), ONGC (1.11%), Mahindra & Mahindra (0.46%), NTPC (0.37%) and HDFC (0.21%) disappointed.

Sector wise, FMCG notched up significant gains on the back of heavy buying in ITC. The BSE FMCG Index ended 4.13 per cent higher. Information technology, metals and banks also marched ahead. However, capital goods and power stocks lagged.

Market breadth was negative with 1,358 declines and 1,312 advances on BSE.