London open: BP leads stocks higher on Greek optimism, stronger commodities

UK stocks surged on Tuesday on the back of optimism surrounding Greece’s proposed debt plan, while rising commodity prices gave resource shares a boost.

Within the first hour of trade, the FTSE 100 was up 1.1% at 6,857, led by gains in the oil and mining sectors, with BP among the best performers after a well-received fourth-quarter report.

The new government in Greece has proposed using debt swaps for new growth-linked bonds, rather than calling for a write-off of its €315n of foreign debt. Finance minister Yanis Varoufakis labelled it “smart debt engineering”.

Analyst Michael Hewson from CMC Markets UK said: “While the initial proposals could well run into obstacles with respect to EU rules about monetary financing, the fact that a new approach is being tried has to be welcome given how much of a disaster the current bailout program has been.”

In other news, the Reserve Bank of Australia has become the latest central bank cut to lower interest rates in response to deflationary concerns. The 25 basis-point reduction to a record-low 2.25% saw the Aussie dollar drop to a fresh five-and-a-half-year low and stock markets leap to their highest since May 2008.

Tuesday will be a relatively quiet day in terms of economic data, though figures from the UK construction sector and US factory orders will be in focus.

BP gains despite Q4 loss, miners surge

BP has slashed its investment budget for 2015 by $4bn-6bn after swinging to a non-adjusted loss in the fourth quarter after taking $3.6bn of impairment charges due to the lower oil price. The oil major reported a replacement cost loss of just under $1bn for the three months to 31 December 2014, compared with a profit of $1.5bn previously. However, underlying profits came in ahead of expectations.

Others in the oil sector were also higher as crude rose 1.9% to $55.77 a barrel, extending gains made over the last few days. Shell was on the rise early on.

Mining stocks were also performing well as metal prices advanced. Antofagasta, BHP Billiton, Anglo American and Rio Tinto were all putting in decent gains.

Aberdeen Asset Management declined after seeing net outflows in the three months to end-December due to a weakening of investor sentiment to emerging markets in December. The first three months of its new financial year recorded a decline in assets under management to £323.3bn from £324.4bn at the September year end.

Business outsourcing firm Capita was a heavy faller after the news that it has acquired European customer services firm Avocis for £157m.

BG Group rose after reporting an adjusted net profit of $915m for the fourth quarter, down 19% year-on-year. However, reported net losses widened to $5.03bn from $1.07bn after a $8.9bn impairment charge due to lower commodity prices.

Energy services group Hunting was higher after Nomura upgraded its rating on the stock to ‘neutral’.

Market Movers
techMARK 3,062.68 +0.67%
FTSE 100 6,857.26 +1.10%
FTSE 250 16,454.91 +0.61%

FTSE 100 - Risers
BHP Billiton (BLT) 1,551.00p +4.51%
BP (BP.) 456.10p +4.20%
Antofagasta (ANTO) 700.00p +4.17%
Weir Group (WEIR) 1,805.00p +4.09%
Coca-Cola HBC AG (CDI) (CCH) 1,114.00p +3.92%
Anglo American (AAL) 1,161.00p +3.29%
Rio Tinto (RIO) 3,054.50p +3.16%
Fresnillo (FRES) 914.50p +3.16%
Royal Dutch Shell 'A' (RDSA) 2,133.50p +3.12%
Glencore (GLEN) 260.55p +2.94%

FTSE 100 - Fallers
Capita (CPI) 1,081.00p -3.05%
Aberdeen Asset Management (ADN) 429.20p -2.48%
SABMiller (SAB) 3,589.50p -0.99%
Diageo (DGE) 1,931.50p -0.95%
Taylor Wimpey (TW.) 132.60p -0.60%
SSE (SSE) 1,609.00p -0.49%
British Land Co (BLND) 835.00p -0.48%
Carnival (CCL) 2,909.00p -0.41%
Intu Properties (INTU) 368.00p -0.38%
InterContinental Hotels Group (IHG) 2,596.00p -0.38%

FTSE 250 - Risers
Afren (AFR) 12.50p +25.00%
Hunting (HTG) 455.70p +8.91%
Computacenter (CCC) 674.00p +6.90%
Petrofac Ltd. (PFC) 768.50p +5.64%
Vedanta Resources (VED) 417.80p +5.53%
Ophir Energy (OPHR) 146.40p +4.65%
UDG Healthcare Public Limited Company (UDG) 413.60p +4.26%
Soco International (SIA) 289.90p +4.24%
Amec Foster Wheeler (AMFW) 865.00p +4.15%
Premier Oil (PMO) 163.20p +4.02%

FTSE 250 - Fallers
Croda International (CRDA) 2,577.00p -4.02%
Saga (SAGA) 175.40p -3.25%
TalkTalk Telecom Group (TALK) 308.90p -2.95%
NMC Health (NMC) 496.10p -2.34%
Allied Minds (ALM) 425.40p -2.21%
Big Yellow Group (BYG) 637.00p -1.70%
Pennon Group (PNN) 851.50p -1.67%
Zoopla Property Group (WI) (ZPLA) 177.00p -1.67%
Unite Group (UTG) 498.60p -1.66%
Jimmy Choo (CHOO) 175.10p -1.52%