London close: Stocks claw back gains as oil prices rise

UK equities finished higher on Thursday, rebounding from an earlier decline, as oil prices regained strength.

The FTSE 100 was in the red earlier in the session as a number of corporate stocks went ex-dividend including Ashtead, AstraZeneca, Barclays, Berkeley Group, BT, GlaxoSmithKline, Fresnillo, Man Group, Royal Dutch Shell, Lloyds, Rio Tinto and Standard Chartered, among others.

“Ex-dividend day on the FTSE 100 has seen the index lag behind its peers, but it has doggedly clawed back losses as the broader equity market enjoys yet more gains,” said Chris Beauchamp, senior market analyst at IG.

At the same time oil prices rebounded after the International Energy Agency forecast crude markets would rebalance in the next few months following several years of overproduction. However, the Paris-based organisation also lowered its forecast for global oil demand in 2017.

“Today’s IEA report paints a more downbeat picture for oil demand heading into year-end than it did in its July update,” said Michael Hewson, chief market analyst at CMC Markets UK.

“…the downgrade to demand by the IEA has raised concerns that lower oil prices could well be with us for a little while longer, great news for consumers, not so much for oil exporters, and oil company share prices that have rallied on the basis that oil prices are on their way back up again.”

Brent crude rose 2.8% to $45.35 per barrel and West Texas Intermediate increased 2.8% to $42.92 per barrel at 1617 BST.

In economic data, the Labor Department revealed US initial jobless claims dropped by 1,000 last week to 266,000 from the previous week’s revised level of 267,000. Economists had been expecting a decline to 265,000.

Meanwhile, a survey by the Royal Institution of Charted Surveyors (Rics) showed British house price growth slowed in the month following the UK’s vote to leave the European Union.

Its headline price balance - a leading indicator of other house price indexes - fell to +5 in July from +15 in June, its lowest level since April 2013. Analysts had forecast a reading of +6.

Housebuilders and real estate investment stocks were under pressure following the report with shares in Berkeley Group, Travis Perkins, British Land and Land Securities lower.

Travis Perkins was also dragged down by a Barclays downgrade. The bank lowered its rating on the stock to ‘underweight’ from 'equalweight’ and cut its target price to 1,400p from 1,950p, saying Brexit will have a larger impact on the business than the market expects, which will hit the valuation.

Card Factory slumped as it reported that the retail environment had been "challenging" in the first half as sales were lower than normal.

On the upside, TUI gained after it said revenues shrank in the third quarter but the travel group was still confident of hitting its full year targets.

Coca-Cola HBC rallied after the soft-drink bottler reported a 2.4% increase in first half net sales revenue.

Market Movers

FTSE 100 (UKX) 6,914.71 0.70%
FTSE 250 (MCX) 17,807.56 0.61%
techMARK (TASX) 3,527.98 0.45%

FTSE 100 - Risers

Coca-Cola HBC AG (CDI) (CCH) 1,681.00p 7.00%
TUI AG Reg Shs (DI) (TUI) 1,041.00p 2.87%
Intertek Group (ITRK) 3,663.00p 2.69%
British American Tobacco (BATS) 4,985.00p 2.60%
Unilever (ULVR) 3,641.50p 2.48%
Glencore (GLEN) 200.00p 2.43%
3i Group (III) 640.00p 2.40%
DCC (DCC) 7,040.00p 2.33%
Standard Life (SL.) 351.00p 2.21%
BP (BP.) 432.30p 2.20%

FTSE 100 - Fallers

Direct Line Insurance Group (DLG) 377.00p -4.07%
Old Mutual (OML) 216.90p -3.81%
Berkeley Group Holdings (The) (BKG) 2,515.00p -3.75%
BT Group (BT.A) 399.30p -2.23%
Travis Perkins (TPK) 1,526.00p -2.18%
British Land Company (BLND) 649.00p -1.96%
ITV (ITV) 197.30p -1.60%
Tesco (TSCO) 156.55p -1.48%
Worldpay Group (WI) (WPG) 307.00p -1.44%
Land Securities Group (LAND) 1,087.00p -1.36%

FTSE 250 - Risers

DFS Furniture (DFS) 258.90p 15.58%
TalkTalk Telecom Group (TALK) 235.60p 7.14%
PayPoint (PAY) 1,030.00p 4.46%
Regus (RGU) 309.90p 3.27%
Tullett Prebon (TLPR) 360.50p 3.15%
Kaz Minerals (KAZ) 164.60p 2.94%
Hastings Group Holdings (HSTG) 212.00p 2.86%
Greencore Group (GNC) 340.00p 2.75%
Britvic (BVIC) 627.00p 2.70%
Tullow Oil (TLW) 221.30p 2.69%

FTSE 250 - Fallers

Aldermore Group (ALD) 141.50p -7.88%
Card Factory (CARD) 298.50p -6.78%
Derwent London (DLN) 2,742.00p -2.73%
Man Group (EMG) 113.60p -2.32%
Countrywide (CWD) 232.90p -2.31%
St. Modwen Properties (SMP) 275.00p -2.17%
OneSavings Bank (OSB) 225.60p -2.13%
Paysafe Group (PAYS) 408.00p -1.73%
Shawbrook Group (SHAW) 200.40p -1.72%
Grafton Group Units (GFTU) 527.50p -1.68%