London close: Oil and mining stocks lift FTSE as commodity prices rise

After a weak start, UK stocks rose to their highest in a week as a decent performance from the resource sectors and upbeat US data gave markets a boost.

London's FTSE 100 finished the session up 0.8% at 6,550.27, its best close since 8 January when it settled at 6,569.96.

Oil and gas stocks were rising strongly as Brent crude advanced 1.8% to $49.12 a barrel after the International Energy Agency (IEA) said a turnaround could be on the horizon.

"A price recovery - barring any major disruption - may not be imminent, but signs are mounting that the tide will turn. A rebalancing may begin to occur in the second half of the year,” the IEA said, as it lowered its forecasts for non-OPEC supply.

Also boosting sentiment in afternoon trade was the University of Michigan US consumer-confidence index which surged to an 11-year high of 98.2 in January, from 93.6 the month before and ahead of the 94.1 forecast.

US consumer prices declined by 0.4% in December as expected due to the drop in fuel price and pushed the annual rate of inflation down to 0.8% from 1.3% the month before.

A surprise decision by the Swiss National Bank (SNB) to remove a currency ceiling rocked financial markets worldwide on Thursday, causing stocks to plummet initially, though equities rallied strongly into the close as hopes for further stimulus measures in the Eurozone increased.

Analysts reckon that the European Central Bank will implement full-blown quantitative easing (QE) when it meets next week in an effort to boost growth and battle deflation.

"While the SNB brings into doubt the longer-term implications of central bank actions, the pulling of the peg has heightened expectations for an imminent announcement of QE from the ECB on 22 January," said analyst Jasper Lawler from CMC Markets UK.

The final reading of the Eurozone consumer price index for December was released on Friday morning and confirmed that the region fell into deflation for the first time since October 2009, with prices declining 0.1% over the month.

BP leads commodity stocks higher

Oil giant BP was a high riser on the news that the civil penalty for the Deepwater Horizon oil spill will be less than feared. BP faces a maximum fine of $13.7bn under the Clean Water Act, some $4bn less than expected, after a court found that 3.19m barrels of oil were discharged in the Gulf of Mexico in 2010 compared with the government's 4.09m estimate.

Smaller producer Afren was also extending gains after soaring 32% the previous session on the back of takeover speculation as potential bidder Seplat secured an option to raise up to $700m to fund acquisitions.

Other oil stocks in London such as Shell, Tullow, Cairn Energy and BG Group were also performing well.

Gold prices were at a four-month high, sending shares in precious-metal producers Fresnillo, Centamin and Randgold into positive territory. Other miners such as Glencore, Antofagasta and BHP Billiton were also on the rise.

JD Sports Fashion was in demand after the sportswear retailer raised its profit outlook for the full year following a strong Christmas.

Imperial Tobacco was performing well after Morgan Stanley hiked its target price from 2,680p to 3,250p and named the stock its new top pick, saying it is “increasingly optimistic” about its pending $7bn acquisition of assets from Reynolds and Lorillard.

Heading the other way was ARM after US chip rival Intel on Thursday night said it had sold more-than-expected chips for tablets in 2014. Liberum kept a ‘sell’ rating on ARM, saying that competition from Intel is now rising in the smartphone sector, “which could take share from ARM in its core market”.

Market Movers
techMARK 2,995.04 +0.32%
FTSE 100 6,550.27 +0.79%
FTSE 250 15,922.51 +0.05%

FTSE 100 - Risers
BP (BP.) 413.35p +5.29%
Glencore (GLEN) 252.55p +4.97%
BG Group (BG.) 852.50p +3.91%
Anglo American (AAL) 1,099.50p +3.78%
Fresnillo (FRES) 884.50p +3.45%
Antofagasta (ANTO) 691.00p +3.13%
BHP Billiton (BLT) 1,388.00p +2.97%
Tullow Oil (TLW) 364.70p +2.76%
Intertek Group (ITRK) 2,351.00p +2.75%
Morrison (Wm) Supermarkets (MRW) 192.70p +2.45%

FTSE 100 - Fallers
easyJet (EZJ) 1,600.00p -2.74%
Meggitt (MGGT) 509.00p -1.74%
Associated British Foods (ABF) 3,093.00p -1.72%
Wolseley (WOS) 3,632.00p -1.71%
Dixons Carphone (DC.) 427.50p -1.59%
Barclays (BARC) 224.35p -1.58%
Burberry Group (BRBY) 1,658.00p -1.54%
Mondi (MNDI) 1,063.00p -1.39%
St James's Place (STJ) 789.50p -1.37%
Babcock International Group (BAB) 1,008.00p -1.08%

FTSE 250 - Risers
Kaz Minerals (KAZ) 194.10p +9.54%
Vedanta Resources (VED) 405.40p +7.88%
JD Sports Fashion (JD.) 508.00p +6.70%
Spectris (SXS) 2,074.00p +5.55%
Moneysupermarket.com Group (MONY) 237.00p +4.91%
Cairn Energy (CNE) 178.50p +4.57%
Centamin (DI) (CEY) 68.50p +4.50%
BlackRock World Mining Trust (BRWM) 314.70p +4.21%
Kier Group (KIE) 1,586.00p +3.66%
Afren (AFR) 29.70p +3.27%

FTSE 250 - Fallers
Countrywide (CWD) 429.00p -5.51%
Infinis Energy (INFI) 183.80p -5.50%
NMC Health (NMC) 470.00p -4.08%
Electrocomponents (ECM) 203.10p -4.06%
Dairy Crest Group (DCG) 473.20p -3.39%
Vesuvius (VSVS) 420.20p -2.73%
Redrow (RDW) 258.60p -2.64%
Dignity (DTY) 1,798.00p -2.49%
Domino Printing Sciences (DNO) 638.00p -2.37%
Hays (HAS) 144.50p -2.30%