London midday: Stocks rally on oil price recovery, ECB stimulus hopes

The FTSE rallied on Friday as oil prices and Asian equities rebounded and after European Central Bank President Mario Draghi hinted at further stimulus in the previous session.

Oil prices bounced back above the $30 per barrel level in a boost to markets. Brent crude jumped 6.1% to $31.15 per barrel and West Texas Intermediate increased 5.01% to $31.09 per barrel at 1148 GMT.

However oil prices remain under pressure, according to Moody’s which reduced its price estimates for Brent and WTI amid a continued oversupply in the market.

In a note to clients on Friday, Moody’s lowered its 2016 price estimate for both Brent and WTI crude to $33 per barrel. For Brent, that marked a $10 per barrel reduction from the rating agency's previous estimate, and for WTI, a $7 per barrel reduction.

Draghi on Thursday said that amid recent falls in oil prices inflation would remain very low or negative in coming months. For this reason, Draghi said the monetary authority would reconsider its monetary policy at its early March meeting when macroeconomic projections became available.

Analysts at Goldman Sachs lowered their 12-month target for euro/dollar to 0.95 from 1.0. Analysts at the broker highlighted the "idiosyncratic" component in euro-area inflation, saying that consumer prices would likely undershoot the ECB's forecasts.

In economic data on Friday, investors shrugged off disappointing UK retail sales figures. Sales fell 1% in December from a month ago, more than the 0.1% drop that was expected by analysts. In comparison to a year ago, retail sales volumes rose 2.6% last month, missing forecasts of 3.5% growth.

“UK retail sales figures for December always had the potential to be a banana skin for Chancellor George Osborne, and he will be disappointed to see sales slide at such a critical time for the sector,” said Dennis de Jong, managing director at UFX.com.

In the Eurozone, Markit’s flash reading on the manufacturing purchasing mangers’ index fell to 53.5 in January from 54.3 in December. A reading above 50 signals expansion in the sector, while a level below that indicates a contraction.

Elsewhere, billionaire investor George Soros warned at the World Economic Forum in Davos that China was already undergoing a 'hard landing' and that the US Federal Reserve would not raise interest rates again this year.

Stocks in Asia finished higher, however, led by Japan's Nikkei after Prime Minister Shinzo Abe’s aide on Thursday said that “conditions for additional easing have fallen into place”. The Bank of Japan meets on 28-29 January when it is expected to increase asset purchases.

Still to come, Bank of England official Jon Cunliffe speaks at Bruegel in Brussels at 1200 GMT, US existing home sales figures will be released at 1500 GMT and Markit releases its PMI on US manufacturing at 1445 GMT.

In company news, BHP Billiton gained even as Liberum analyst warned that the miner may need to raise between $5bn and $10bn to keep hold of its solid A credit rating.

Fellow oil producers including Royal Dutch Shell and BG Group, were sitting higher on the oil price rebound.

Office space provider Workspace Group advanced after reporting a 2.3% rise in third quarter rent rolls to £80.8m and saying letting activity picked up “significantly” in the new year.

Hammerson jumped after saying it has it exchanged contracts with Birmingham City Council to acquire the new Grand Central shopping centre in Birmingham for £335m.

Home Retail was given a boost as Exane BNP Paribas raised the stock to ‘neutral’ from ‘underperform’’ and lifted the price target to 150p from 80p, given the likelihood of a bid from Sainsbury’s, but with a lack of visibility over the price.

Pearson plunged after warning that its full year profits would be less than market expectations amid a restructuring.

Market Movers

FTSE 100 (UKX) 5,912.72 2.41%
FTSE 250 (MCX) 16,093.10 1.64%
techMARK (TASX) 3,096.44 2.13%

FTSE 100 - Risers

Antofagasta (ANTO) 387.50p 6.05%
Royal Dutch Shell 'B' (RDSB) 1,395.00p 5.80%
Royal Dutch Shell 'A' (RDSA) 1,391.00p 5.66%
Hikma Pharmaceuticals (HIK) 2,001.00p 5.15%
BG Group (BG.) 980.10p 5.08%
Sports Direct International (SPD) 416.40p 4.68%
Aberdeen Asset Management (ADN) 236.00p 4.56%
BHP Billiton (BLT) 669.50p 4.15%
BP (BP.) 355.75p 3.94%
Wolseley (WOS) 3,496.00p 3.92%

FTSE 100 - Fallers

Pearson (PSON) 750.50p -2.78%
easyJet (EZJ) 1,631.00p 0.06%
Carnival (CCL) 3,629.00p 0.28%
SABMiller (SAB) 4,165.00p 0.39%
Marks & Spencer Group (MKS) 419.30p 0.43%
Coca-Cola HBC AG (CDI) (CCH) 1,372.00p 0.44%
Persimmon (PSN) 1,915.00p 0.58%
Prudential (PRU) 1,330.50p 0.72%
Taylor Wimpey (TW.) 180.70p 0.72%
Sage Group (SGE) 554.00p 0.73%

FTSE 250 - Risers

Tullow Oil (TLW) 149.60p 15.79%
Virgin Money Holdings (UK) (VM.) 308.10p 8.87%
Renishaw (RSW) 1,727.00p 7.94%
Petrofac Ltd. (PFC) 749.00p 7.31%
Amec Foster Wheeler (AMFW) 400.00p 6.47%
Vedanta Resources (VED) 227.00p 6.37%
Telecom Plus (TEP) 943.00p 6.25%
Ophir Energy (OPHR) 83.75p 5.95%
Just Eat (JE.) 431.00p 5.38%
Circassia Pharmaceuticals (CIR) 295.40p 4.75%

FTSE 250 - Fallers

Jimmy Choo (CHOO) 120.30p -4.22%
Nostrum Oil & Gas (NOG) 282.60p -3.88%
Ocado Group (OCDO) 275.20p -2.38%
Moneysupermarket.com Group (MONY) 321.60p -1.68%
Greggs (GRG) 978.50p -1.31%
Acacia Mining (ACA) 173.60p -1.14%
Ted Baker (TED) 2,620.00p -0.80%
John Laing Group (JLG) 204.20p -0.73%
Dignity (DTY) 2,251.00p -0.71%
Lancashire Holdings Limited (LRE) 601.50p -0.66%