London midday: Stocks gain on oil price rise, dovish Yellen

London stocks gained on Tuesday as oil prices rose and a speech by Federal Reserve chair Janet Yellen suggested an interest rate hike in June was off the table.

Oil prices continued to rally on supply disruptions in Nigeria and forecasts for falling US crude inventories.

Brent crude rose 0.43% to $50.77 per barrel and West Texas Intermediate climbed 0.36% to $49.87 per barrel at 1145 BST

The Bonny Light crude output in Nigeria has dropped an estimated 170,000 barrels per day (bpd) following attacks on pipeline infrastructure, Reuters reported citing a source.

A report from the American Petroleum Institute at 2130 BST is expected to show US crude inventories fell 3.5 million barrels last week, helping to soothe concerns about the global supply glut.

Meanwhile, Yellen said the US economy was making progress but kept quiet about the timing of another interest rate increase.

“I continue to think that the federal funds rate will probably need to rise gradually over time to ensure price stability and maximum sustainable employment in the longer run,” Yellen said Monday during a speech in Philadelphia.

Her failure to mention the specific timing on interest rates hikes was seen by economists to signal that a rise was unlikely at the policy meeting next week, particularly after a much worse-than-expected US non-farm payrolls report on Friday.

“With a summer hike now looking increasingly unlikely, there is a feeling that we could see a hot streak for the FTSE if a Brexit is averted,” said IG market analyst Joshua Mahony.

“Stocks are on top form this morning, as rising energy prices and a dovish Fed outlook help negate any threat from a potential Brexit in 16 days’ time.”

A new poll from The Telegraph and ORB showed 52% of those in the UK in favour of staying in the EU, compared to 40% who want to leave.

It contrasts with two polls from YouGov and Observer/Opinium on Monday which revealed more people in the Leave camp.

The pound rebounded from Monday’s slide, rising 1.03% against the dollar to $1.4591 at 1156 BST, following the latest poll.

In economic data, Eurostat said the eurozone grew more rapidly in the first quarter than previously estimated. Gross domestic product rose 0.6% in the first quarter than in the final three months of 2015, and was 1.7% higher than the first three months of last year. Eurostat had previously estimated that the economy grew by 0.5% on the quarter, and 1.5% on the year. Analysts had expected no change to the estimates.

On the company front, Royal Dutch Shell rallied after saying it was increasing the level of cost cuts from its merger with BG Group to $4.5bn from $3.5bn.

Weir Group advanced after Canaccord Genuity raised its rating on the stock to ‘hold’ from ‘sell’ and its target price to 1,200p from 800p.

Tullet Prebon and ICAP were under the cosh. Britain's competition regulator said it was referring Tullett Prebon's planned purchase of ICAP's global hybrid voice broking and information business for a phase 2 investigation. The Competition and Markets Authority (CMA) said it was referring as a result of potential concerns in respect of the voice/hybrid broking ‎of oil products unless suitable remedies are offered, ICAP said.

Market Movers

FTSE 100 (UKX) 6,300.34 0.43%
FTSE 250 (MCX) 17,260.18 0.46%
techMARK (TASX) 3,146.53 0.20%

FTSE 100 - Risers

Royal Dutch Shell 'A' (RDSA) 1,750.50p 2.91%
Royal Dutch Shell 'B' (RDSB) 1,761.00p 2.86%
Next (NXT) 5,460.00p 1.87%
Rolls-Royce Holdings (RR.) 621.50p 1.47%
Burberry Group (BRBY) 1,094.00p 1.39%
Lloyds Banking Group (LLOY) 70.58p 1.35%
Travis Perkins (TPK) 1,878.00p 1.29%
DCC (DCC) 6,405.00p 1.26%
Old Mutual (OML) 186.80p 1.25%
easyJet (EZJ) 1,526.00p 1.19%

FTSE 100 - Fallers

Antofagasta (ANTO) 439.80p -2.27%
Direct Line Insurance Group (DLG) 370.80p -1.28%
Anglo American (AAL) 678.60p -1.17%
Persimmon (PSN) 2,007.00p -0.99%
SSE (SSE) 1,540.00p -0.65%
Taylor Wimpey (TW.) 187.30p -0.64%
Centrica (CNA) 202.90p -0.54%
Imperial Brands (IMB) 3,782.50p -0.53%
Kingfisher (KGF) 365.10p -0.52%
Informa (INF) 680.00p -0.51%

FTSE 250 - Risers

Evraz (EVR) 122.30p 5.89%
Drax Group (DRX) 319.80p 4.20%
Tullow Oil (TLW) 251.00p 3.80%
Amec Foster Wheeler (AMFW) 460.30p 3.79%
Weir Group (WEIR) 1,309.00p 3.48%
Aberdeen Asset Management (ADN) 279.60p 2.95%
Vesuvius (VSVS) 336.00p 2.53%
Aldermore Group (ALD) 216.30p 2.51%
Petrofac Ltd. (PFC) 799.50p 2.50%
Entertainment One Limited (ETO) 186.00p 2.48%

FTSE 250 - Fallers

Allied Minds (ALM) 345.00p -4.56%
Tullett Prebon (TLPR) 316.10p -2.80%
Softcat (SCT) 370.00p -2.22%
Man Group (EMG) 131.50p -2.16%
Shawbrook Group (SHAW) 270.40p -2.06%
Paysafe Group (PAYS) 397.00p -1.85%
Euromoney Institutional Investor (ERM) 969.50p -1.47%
Rathbone Brothers (RAT) 1,873.00p -1.42%
Card Factory (CARD) 364.80p -1.22%
Vedanta Resources (VED) 399.90p -1.19%