London midday: Energy stocks rise but FTSE pares gains ahead of Fed meeting

Stocks in the oil and mining sectors were performing well on Tuesday morning, though gains for the wider market were erased by lunchtime as investors awaited the start of a Federal Reserve policy meeting.

Weaker-than-expected economic data from Germany was also dampening sentiment, as European markets retreated after a strong previous session.

London's FTSE 100 was broadly flat by midday, trading just 0.04% higher at 6,806.80, pulling back after hitting a high of 6,846.90 early on.

Markets had risen initially, tracking gains in Asia overnight, with Chinese and Japanese stocks at seven- and 15-year highs, respectively, on continued speculation about potential easing measures in Beijing and an unchanged ¥80trn stimulus programme from Tokyo.

The Fed meeting concludes on Wednesday evening, and while no change is expected in policy, markets will be watching the central bank's forward guidance closely, given recent speculation that policymakers could hike interest rates sooner than expected. Economists say the Federal Open Market Committee is likely to remove the word 'patient' from its statement on the timing of policy tightening.

In economic data, analysts’ confidence in the outlook for the German economy improved in March, but not by as much as had been forecast. The ZEW institute’s gauge of economic confidence in Germany improved to 54.8 from 53, missing the consensus forecast of 59.4.

While expectations for the domestic economy have continued to be met, sentiment has been dampened by “limited progress [...] being made with regard to solving the Ukraine conflict and the sovereign debt crisis in Greece”, according to ZEW president Clemens Fuest.

Oil and mining stocks rise

Energy stocks such as Tullow Oil, BG Group, Shell and BP were putting in decent gains on Tuesday morning amid speculation that North Sea oil and gas producers are set to benefit from UK tax cuts in Wednesday’s Budget statement.

Mining stocks were mostly higher, including Glencore, Rio Tinto and Anglo American.

Heavyweight miner BHP Billiton also rose after shareholders welcomed the company's recommendation to approve its proposed demerger as it spins off its non-core activities into a new company called South32. The group said one-off costs associated with the transaction would be $738m, though it promised not to cut its dividend post-demerger.

Platinum miner Lonmin surged after an upgrade by Citigroup to 'buy'. The company also appointed a new chief operating officer to replace Johan Viljon who resigned one month ago.

However, Antofagasta was bucking the trend after profits sank by a more-than-expected 18% in 2014, prompting the company to slash its dividend by 77.4%. The miner also warned of "some inherent uncertainty" surrounding flagship Los Pelambres project in Chile.

Sainsbury's posted a 1.9% fall in fourth-quarter like-for-like sales excluding fuel, not as bad as many had feared, helping the stock higher.

Building materials group CRH was extending losses after Holcim rejected the terms of its proposed tie-up with Lafarge. CRH is set to snap up €6.5bn of assets from the two cements companies when they merge.

Telecom group BT dropped after being fined £800,000 by Ofcom for failing to provide an improved text-to-voice service.

Market Movers
techMARK 3,200.74 -0.61%
FTSE 100 6,806.80 +0.04%
FTSE 250 17,144.05 -0.33%

FTSE 100 - Risers
Tullow Oil (TLW) 295.00p +4.91%
Centrica (CNA) 245.70p +2.67%
BG Group (BG.) 841.30p +2.35%
easyJet (EZJ) 1,767.00p +1.90%
Royal Dutch Shell 'B' (RDSB) 2,063.50p +1.88%
Royal Dutch Shell 'A' (RDSA) 1,971.00p +1.83%
SSE (SSE) 1,495.00p +1.77%
Smiths Group (SMIN) 1,197.00p +1.53%
BHP Billiton (BLT) 1,437.50p +1.52%
BP (BP.) 423.35p +1.38%

FTSE 100 - Fallers
Antofagasta (ANTO) 682.00p -3.54%
Tesco (TSCO) 235.30p -2.51%
CRH (CRH) 1,695.00p -2.08%
Schroders (SDR) 3,205.00p -1.93%
Mondi (MNDI) 1,334.00p -1.91%
Morrison (Wm) Supermarkets (MRW) 202.10p -1.80%
Imperial Tobacco Group (IMT) 3,115.00p -1.70%
Taylor Wimpey (TW.) 148.20p -1.53%
Wolseley (WOS) 4,092.00p -1.52%
SABMiller (SAB) 3,648.50p -1.52%

FTSE 250 - Risers
Premier Oil (PMO) 132.70p +10.40%
Lonmin (LMI) 120.40p +8.47%
Hunting (HTG) 460.70p +5.52%
Petrofac Ltd. (PFC) 848.50p +2.85%
Spire Healthcare Group (SPI) 346.60p +2.61%
Ophir Energy (OPHR) 120.00p +2.39%
Just Eat (JE.) 370.00p +1.84%
Kaz Minerals (KAZ) 204.00p +1.80%
Amec Foster Wheeler (AMFW) 897.50p +1.76%
Fidelity European Values (FEV) 180.90p +1.69%

FTSE 250 - Fallers
Afren (AFR) 3.28p -12.33%
Pace (PIC) 349.60p -3.48%
Carillion (CLLN) 338.70p -2.59%
Hikma Pharmaceuticals (HIK) 2,205.00p -2.56%
Man Group (EMG) 192.80p -2.53%
Essentra (ESNT) 991.00p -2.46%
AO World (AO.) 178.00p -2.25%
BTG (BTG) 777.00p -2.20%
Greencore Group (GNC) 318.00p -2.12%
Jimmy Choo (CHOO) 168.40p -2.09%