BP fuels FTSE gains

 

The country's top share index was up by midday on Tuesday as forecast-beating results from oil giant BP fuelled a rally among energy stocks, offsetting a weak banking sector.

By 11:55 a.m. British time, the FTSE 100 was up 30.71 points, or 0.6 percent at 5,222.53, after closing down 1 percent on Monday.

The index has surged about 51 percent from a six-year low in March, though is still 3.7 percent below its level in mid-September 2008, before the collapse of Lehman Brothers.

"These are markets that are not necessarily to be trusted" said Howard Wheeldon, strategist at BGC Partners. "There is a degree of uncertainty out there, but nothing this morning has yet so far upset the apple cart."

Energy stocks added most the points to the index, led by BP, up 4.2 percent after it reported a halving of third-quarter profits but beat forecasts by a wide margin.

BP's news had a positive knock-on effect on its peers, with BG Group adding 1.4 percent ahead of its third quarter results on Wednesday, while Royal Dutch Shell firmed 1 percent, and Cairn Energy was 0.5 percent higher.

Drugmakers were also in demand, ahead of third-quarter numbers from the sector.

GlaxoSmithKline, due to post results on Wednesday, added 2.7 percent, after the company and Danish biotech firm Genmab won U.S. approval to sell a leukaemia drug. 

AstraZeneca, scheduled to report its results on Thursday, rose 1.2 percent, while Shire climbed 1 percent.

Results anticipation also gave Reckitt Benckiser a lift, with shares in the cleaning products group rising 1.6 percent before its third-quarter results due at noon on Tuesday.

A broker upgrade boosted Reed Elsevier, up 3.7 percent. Exane BNP Paribas lifting its rating for the Anglo-Dutch publishing group to "outperform" from "underperform" on valuation grounds.

RBS BIG FALLER

Banks were the biggest drag on the index, with Royal Bank of Scotland the top faller, off 2.8 percent.

Investors were unsettled after fears mounted on Monday that Lloyds Banking Group and RBS would be ordered into disposals by the European Commission after Dutch peer ING announced it would split into two units and launch a 7.5 billion euro rights issue.

Lloyds fell 2.4 percent, while Barclays, HSBC and Standard Chartered shed 0.8 to 2.1 percent.

Heavyweight miners were weak as doubts about the demand outlook resurfaced.

Rio Tinto, Xstrata, Anglo American, Kazakhmys and Fresnillo lost 0.3 to 1.9 percent. 

U.S. blue chips were expected to rally on Tuesday after sharp falls in the previous session. U.S. economic data set for release on Tuesday include the August figures for the S&P/Case-Shiller index of house prices at 1 p.m. and U.S. consumer confidence numbers for the same month at 2 p.m. British time.

The Bank of England's quantitative easing policy will not cause a future surge in inflation, BoE policymaker Adam Posen said on Monday.