BT deal and oil resurgance lead to late FTSE rally - London Report

THE FTSE 100 recovered from earlier losses, as a late rally yesterday in crude oil prices boosted energy stocks and telecom firm BT Group advanced after its strategic acquisition of mobile operator EE.

The UK Oil and Gas index rose 1.2 per cent after crude jumped about 5 per cent on falling output and rising violence in Libya.

“Valuations are beginning to look more attractive and could give rise to merger and acquisition activities in the energy sector. Investors are looking to take advantage of any rise in crude oil prices,” Securequity sales trader Jawaid Afsar said.

The blue-chip FTSE 100 index ended 0.1 per cent higher at 6,865.93 points after falling to an intra-day low of 6,808.19 points earlier in the session.

Energy companies featured among the top gainers, with shares in Tullow Oil, BG Group and Weir Group rising 2.3 to 5.6 per cent.

“With a surge in oil prices, people have been buying oil-related stocks to benefit from the intra-day price moves,” Tom Robertson, senior trader at Accendo Markets, said.

“We’ll have to wait to see if the oil price settles, but whilst this uncertainty in oil continues, the related companies could be ideal intraday trading candidates.”

The FTSE 100 index was also supported by a 4.5 per cent rise in BT to a 14-year high after it agreed a £12.5bn deal for EE.

However, investors stayed cautious due to jitters in Greece after the European Central Bank (ECB) hardened its financing rules for Greek banks, sending their shares sharply lower and dragging down markets.

The ECB abruptly cancelled its acceptance of Greek bonds in return for funding, shifting the burden onto Athens’ central bank to finance its lenders and isolating Greece unless it strikes a new reform deal.

“The ECB is trying to keep Greece in line by cancelling its acceptance of Greek government bonds in exchange for funding, sending a ripple through equity markets. The ECB is showing Athens who is boss,” IG analyst David Madden said.Among other sharp movers, drug-maker AstraZeneca fell 3.4 per cent, the top faller in the FTSE 100 index, after saying its fourth quarter results missed expectations.

However, mid-cap company Rexam surged 20 per cent after saying it was in talks to be potentially bought by US rival Ball Corp in an offer that values the company at about £4.29bn.

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