London close: Stocks finish higher as oil prices rally

London stocks closed in the black on Tuesday, underpinned by a strong showing from oil giants Shell and BP, as investors mulled the latest reading on the UK services sector.

The FTSE 100 ended the session up 1.66% at 5,849.42, and the FTSE 250 was ahead 0.89% at 16,093.14.

Sterling was stronger against both of its major trading pairs, last rising 0.07% on the dollar to $1.2452, and gaining 0.67% on the euro to €1.1485.

“Reverting back to the optimism that started to creep in towards the end of April - before Donald Trump opened his big mouth and unleashed an election-eyeing attack on China - the Europe markets all rebounded on Tuesday,” said Spreadex analyst Connor Campbell.

“With Boris Johnson likely to unveil some form of lockdown plan this week, Italy and Spain easing restrictions, and California to follow suit on Friday, investors decided to turn away from the US-China tensions to focus on the idea that the worst part of the pandemic may be approaching its end.”

On the data front, figures out earlier showed that activity in the UK services sector slumped to a record low in April amid the coronavirus lockdown.

The IHS Markit/CIPS services purchasing managers' index slid to 13.4 from 34.5 in March, coming in a touch ahead of the preliminary reading of 12.3 but marking a record low.

Prior to the last two months, the survey-record low stood at 40.1 in November 2008.

A reading below 50.0 indicates contraction, while a reading above signals expansion.

Tim Moore, economics director at IHS Markit, said the data suggests the downturn in the UK economy in the second quarter of this year will be "far deeper and more widespread than anything seen in living memory".

"Historical comparisons of the PMI with GDP indicate that the April survey reading is consistent with the economy falling at a quarterly rate of approximately 7%, but we expect the actual decline in GDP could be even greater, in part because the PMI excludes the vast majority of the self-employed and the retail sector."

In equity markets, Shell and BP paced the gains as oil prices rose on storage hopes, with West Texas Intermediate last up 18.49% at $24.16 per barrel and Brent crude adding 11.51% to $30.33.

Shell closed up 5.06% in London, and BP was ahead 6.09%.

Carnival reversed earlier gains to close down 0.39%, after falling sharply on Monday, as it said it will resume its P&O Cruises operations in Australia and New Zealand after 31 August, in response to continuing travel restrictions due to the impact of Covid-19.

Market Movers

FTSE 100 (UKX) 5,849.42 1.66%
FTSE 250 (MCX) 16,093.14 0.89%
techMARK (TASX) 3,554.15 1.51%

FTSE 100 - Risers

BP (BP.) 318.90p 6.09%
Royal Dutch Shell 'A' (RDSA) 1,335.60p 5.55%
Melrose Industries (MRO) 98.76p 5.42%
Royal Dutch Shell 'B' (RDSB) 1,284.80p 5.06%
Informa (INF) 433.20p 4.86%
Glencore (GLEN) 143.74p 4.49%
Compass Group (CPG) 1,304.50p 4.32%
InterContinental Hotels Group (IHG) 3,537.00p 4.21%
Centrica (CNA) 40.38p 4.18%
Experian (EXPN) 2,436.00p 3.79%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 195.95p -3.90%
JD Sports Fashion (JD.) 505.20p -3.37%
Next (NXT) 4,595.00p -3.30%
Barratt Developments (BDEV) 517.20p -3.22%
Smurfit Kappa Group (SKG) 2,408.00p -1.79%
CRH (CRH) 2,330.00p -1.40%
Mondi (MNDI) 1,337.00p -1.26%
Hargreaves Lansdown (HL.) 1,450.00p -1.16%
Fresnillo (FRES) 689.20p -1.15%
Meggitt (MGGT) 264.00p -1.12%

FTSE 250 - Risers

TI Fluid Systems (TIFS) 168.00p 7.82%
Hyve Group (HYVE) 20.65p 7.55%
Pets at Home Group (PETS) 253.00p 6.66%
Weir Group (WEIR) 952.60p 6.55%
OneSavings Bank (OSB) 242.80p 5.57%
Micro Focus International (MCRO) 472.90p 5.09%
Computacenter (CCC) 1,509.00p 5.01%
Serco Group (SRP) 132.80p 4.81%
Cairn Energy (CNE) 118.80p 4.76%
Bodycote (BOY) 582.00p 4.49%

FTSE 250 - Fallers

Capita (CPI) 35.03p -5.02%
Marston's (MARS) 33.64p -4.70%
C&C Group (CCR) 185.00p -4.64%
Bakkavor Group (BAKK) 71.60p -4.53%
Equiniti Group (EQN) 153.60p -4.36%
Marks & Spencer Group (MKS) 87.10p -3.93%
Stagecoach Group (SGC) 63.95p -3.88%
LXI Reit (LXI) 97.00p -3.77%
Oxford Instruments (OXIG) 1,198.00p -3.39%
Ibstock (IBST) 199.80p -3.20%