Oil majors curb the FTSE 100 despite solid corporate news

BRITAIN’S top share index fell yesterday, hurt by Royal Dutch Shell as the oil major’s results were met with disappointment, while drugmaker GlaxoSmithKline rose after it decided to push ahead with a buyback programme.

The FTSE 100 shed 16.73 points, or 0.3 per cent, to 5,983.34, after closing 0.7 per cent higher on Wednesday.

The FTSE 250 also lost out, shedding 30.83 points, or 0.26 per cent, to close at 11,575.83.

“People are waiting for a significant break and close above [the 6,000 level] for the market to push on,” said Yusuf Heusen, senior sales trader at IG Index.

Heusen argued that major impediments to the index’s progress yesterday were Shell after its results and BP on uncertainty surrounding its planned Arctic exploration partnership with Rosneft, Russia’s state oil group.

Share price declines from Royal Dutch Shell’s A and B shares and BP knocked a total of 24 points off the UK blue chip index.

Shell’s A shares fell three per cent after the firm posted weak refining and downstream results, as an oil price fuelled rebound in its fourth-quarter profit fell short of expectations.

BP, whose own results undershot forecasts earlier in the week, fell 2.1 per cent on the increasing concern surrounding its Russian deal, as peer BG Group, due to report next Tuesday, also slipped 1.9 per cent.

GlaxoSmithKline, up 3.6 per cent, helped curb the FTSE 100’s decline.

Britain’s biggest drugmaker said it would start buying back shares again in 2011, demonstrating confidence it has turned the corner following massive legal bills, as it posted quarterly results which were viewed as broadly in-line.

BT Group also provided support, adding 3.6 per cent, after the telecoms provider reported third-quarter results which Prime Markets described as “excellent”.

“[We] view the post Christmas dip as a window of opportunity to pick up the shares before they once again begin their seemingly inevitable upward trajectory for 2011,” it said in a note.

Aggreko added 4.9 per cent, the top FTSE 100 riser, after Bank of America Merrill Lynch upgraded its rating for the temporary power supplier to “buy” from “neutral” citing valuation grounds.

Intercontinental Hotels was also among the top risers, up 2.9 per cent, while most of the travel and leisure sector fell.

Analysts said concerns that the uprising in Egypt could spread across the region also weighed on investor sentiment.

“For as long as [the situation in Egypt] continues, the markets will be a little bit nervous,” Angus Campbell, head of sales at Capital Spreads, said.

“Western economies are very reliant on their major export, which is oil of course, but also there are a number of important business relationships we have with that part of the world.”

Better-than-expected readings of US economic growth were not enough to dislodge fears about Egypt, where gunmen fired on anti-government protesters in Cairo.

Data released yesterday showed that the US services sector grew in January at its fastest pace since August 2005, and initial claims in the latest week for state unemployment benefits fell more than had been expected.