London midday: BP leads oil stocks higher as crude recovers, FTSE flat

Decent gains from BP and the wider oil sector helped UK stocks to pare losses by Friday lunchtime, though the mood was still cautious ahead of some key economic figures from the States.

BP was on the rise after being handed a smaller-than-expected civil penalty over the Gulf of Mexico oil spill in 2010, with energy stocks tracked the price of crude higher.

London’s FTSE 100, which fell to a low of 6,443.28 early on, had recovered to trade more or less flat at 6,498 by midday ahead of US consumer-price index (CPI) inflation figures due out later in the afternoon.

Oil prices advanced on Friday morning, with Brent futures up 2.6% at $49.50 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.

A surprise decision by the Swiss National Bank 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 when it meets on 22 January in an effort to boost grove and battle deflation.

The final reading of the Eurozone CPI for December was released and confirmed that the region fell into deflation for the first time since October 2009, with prices falling by 0.1% over the month.

US CPI figures due out later are expected to show that the annual rate of price rises slowed dramatically to just 0.7% in December from 1.3% the month before on the back of a recent slump in oil. Core inflation, which excludes food and energy, is expected to hold steady at 1.7%.

US industrial production figures and the University of Michigan US consumer-confidence index will also be released.

BP leads oil stocks higher

Oil giant BP faces a maximum penalty of $13.7bn under the Clean Water Act, after the District Court for the Eastern District of Louisiana ruling on the Deepwater Horizon case has found that 3.19m barrels of oil were discharged in the Gulf of Mexico in 2010. The bill, which was some $4bn less than feared, put the spill's size below the government's 4.09m estimate and just under the 3.26m estimated by the firm.

Sector peers such as Shell, BHP Billiton and Tullow Oil were also on the rise.

FTSE 250 producer Afren was extending gains after soaring 32% the previous session on the back of takeover speculation. The advance came after Nigerian group Seplat, which had approached Afren last month regarding a merger, secured an option to raise up to $700m to fund acquisitions. It has until Monday to make a firm offer.

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 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”.

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

Product testing group Spectris also rose after reporting that sales rose across the board in the fourth quarter and like-for-like sales for full 2014 financial year were up 2%.

Market Movers
techMARK 2,976.20 -0.31%
FTSE 100 6,496.77 -0.03%
FTSE 250 15,816.61 -0.62%

FTSE 100 - Risers
BP (BP.) 407.90p +3.90%
Imperial Tobacco Group (IMT) 2,905.00p +1.93%
Experian (EXPN) 1,141.00p +1.78%
Anglo American (AAL) 1,078.00p +1.75%
BT Group (BT.A) 406.40p +1.55%
BHP Billiton (BLT) 1,368.00p +1.48%
BG Group (BG.) 831.50p +1.35%
Tullow Oil (TLW) 359.50p +1.30%
Glencore (GLEN) 243.70p +1.29%
SSE (SSE) 1,493.00p +0.88%

FTSE 100 - Fallers
Dixons Carphone (DC.) 421.80p -2.90%
easyJet (EZJ) 1,603.00p -2.55%
ARM Holdings (ARM) 970.50p -2.51%
Wolseley (WOS) 3,610.00p -2.30%
Hargreaves Lansdown (HL.) 921.50p -1.92%
Babcock International Group (BAB) 1,001.00p -1.77%
Persimmon (PSN) 1,433.00p -1.58%
Prudential (PRU) 1,492.00p -1.55%
Meggitt (MGGT) 510.00p -1.54%
HSBC Holdings (HSBA) 587.70p -1.54%

FTSE 250 - Risers
Afren (AFR) 31.93p +11.02%
JD Sports Fashion (JD.) 505.00p +6.07%
Spectris (SXS) 2,066.00p +5.14%
Enterprise Inns (ETI) 109.10p +2.83%
Vedanta Resources (VED) 384.10p +2.21%
Cairn Energy (CNE) 173.50p +1.64%
Kier Group (KIE) 1,551.00p +1.37%
SSP Group (SSPG) 265.50p +1.30%
Supergroup (SGP) 900.50p +1.29%
Lancashire Holdings Limited (LRE) 567.00p +1.25%

FTSE 250 - Fallers
Electrocomponents (ECM) 201.10p -5.01%
Countrywide (CWD) 433.00p -4.63%
Dignity (DTY) 1,763.00p -4.39%
Pace (PIC) 335.70p -3.40%
Redrow (RDW) 257.00p -3.24%
Hunting (HTG) 430.00p -3.04%
Zoopla Property Group (WI) (ZPLA) 158.90p -2.81%
Infinis Energy (INFI) 189.50p -2.57%
Dairy Crest Group (DCG) 477.40p -2.53%
Just Retirement Group (JRG) 133.80p -2.48%