UNREST in the Middle East and North Africa hit Britain’s top shares again yesterday, though rising crude prices and upbeat comment from oil major BP on its Indian activities lifted energy stocks.
The FTSE 100 closed down 3.55 points, or 0.1 per cent, at 5,919.98, pinned just below a seven-month technical support level of 5,920.
US crude oil futures rallied for a third session yesterday as prices soared to their highest since late August 2008 as escalating violence in Libya sparked supply worries. Tullow Oil added three per cent.
BP’s Indian head, Sashi Mukundan, estimated there were 15 trillion cubic feet of gas resources in the 23 blocks it has bought into in its $7.2bn deal with Reliance Industries, and there could be more.
BP gained 0.9 per cent on the news, which also helped spark a 2.4 per cent rally in oil explorer Cairn Energy.
Cairn Energy, which has blocks in India, is currently trying to sell a majority stake in its Indian arm Cairn India to Vedanta Resources.
However, weakness from risk-sensitive banks helped keep the index in the red for a fifth session.
It is down 2.7 per cent so far this week, on track for its biggest weekly drop in nearly eight months as the price of oil has hit multi-year highs, threatening to derail the global economic recovery.
“Oil is the lubricant of economic expansion, and its rising price acts as a tax on global growth, which is making investors risk averse and encouraging them to book profits,” said Henk Potts, strategist at Barclays Wealth.
The FTSE volatility index, which measures investor appetite for risk, is up 35 per cent this week.
Banks were the most significant drag on the index, as investors looked uneasily at the unrest in the Middle East and North Africa.
RBS came off worst, down 3.6 per cent, as its results met with disappointment.
Bad debts from Ireland, an uninspiring investment banking performance and lack of dividend put pressure on the shares, traders said.
British American Tobacco fell 0.7 per cent, after the maker of Kent, Dunhill, Lucky Strike and Pall Mall cigarettes reported full-year results.
“[The numbers] all looked in line, the dividend was slightly better than expected, and [it announced] a £750m buyback, but the market expected £1bn, so that was a little disappointing,” said Alwyn Phillips, a trader at IG Index.
GKN shed 2.3 per cent after Citigroup cut its rating for the automotive and aerospace parts group to “hold” from “buy” ahead of upcoming full-year results.
“We sense a pause in the pace of its recent rapid profit rise,” Citigroup says in a note.
Capita was the star FTSE 100 performer, up 7.2 per cent, as the outsourcing group's full-year results and strong bid pipeline pleased the market.
Miner Antofagasta continued its winning streak, up 2.7 per cent yesterday, while outsourcing group Serco rose 2.6 per cent.
Outside the top flight, Mouchel rose 12 per cent after it revealed advanced talks with a potential takeover bidder.
Sports retailer JJB tanked 23.9 per cent in reaction to the news that one of its landlords planned to reject its last-ditch rent agreement.
Soft drinks group Britvic fell 11.7 per cent after it said rising commodity costs would cause it to miss profit forecasts.