London close: Energy stocks lift markets ahead of Budget, as investors await Fed

Rumours about potential tax breaks for North Sea oil and gas producers were providing energy stocks with a much-needed boost on Tuesday, even as the price of crude continued to tumble.

Brent crude prices were down 2.3% at $53.44 a barrel in afternoon trade, trading at a six-week low, while West Texas Intermediate oil was 1.8% lower at $43.10, extending losses after hitting a six-year low on Monday.

Ongoing speculation about possible future stimulus in China was also giving mining stocks a lift, along with a well-received statement from the world's largest miner, BHP Billiton.

As such, the Footsie finished up 33.53 points at 6,837.61 as it continued to recover after a 2.5% drop last week, its worst weekly performance of the year so far.

Along with events in Westminster, a much-anticipated Federal Reserve meeting will dominate proceedings on Wednesday. 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.

Stocks fell into negative territory temporarily after data from Germany showed that analysts' confidence in the economic outlook didn't improve as much as hoped in March. The ZEW institute’s gauge of economic confidence in Germany improved to 54.8 from 53, missing the consensus forecast of 59.4, with Greece and Ukraine said to be dampening sentiment.

Energy stocks jump on Budget hopes

Premier Oil, Tullow Oil, Centrica were leading the risers with gains of 17%, 6% and 5% respectively ahead of the Budget on Wednesday, given their exposure to the North Sea. Other oil and gas producers and energy services groups such as BG Group, Shell, Hunting and Ophir Energy were also putting in decent gains.

Mining stocks were also up on hopes for easing measures from Beijing, with BHP Billiton, Anglo American, Rio Tinto and Glencore rising strongly.

BHP Billiton was the standout riser in the sector, jumping 3% 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.

Tesco shares were in the red, reversing from Monday, alongside Morrison, as Sainsbury's warned it expects another year of challenging trading conditions following a weak trading update, in which sales fell for a fifth consecutive quarter. Sainsbury's was also lower despite beating analysts' forecasts with a less-than-expected decline in like-for-like sales.

Analysts also said that planned increases to the minimum wage as part of the Budget were also dampening shares in the supermarket sector.

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.

Market Movers
techMARK 3,217.44 -0.09%
FTSE 100 6,837.61 +0.49%
FTSE 250 17,202.91 +0.01%

FTSE 100 - Risers
Tullow Oil (TLW) 298.40p +6.12%
Centrica (CNA) 251.20p +4.97%
easyJet (EZJ) 1,792.00p +3.34%
BHP Billiton (BLT) 1,463.00p +3.32%
Babcock International Group (BAB) 956.00p +2.41%
BG Group (BG.) 840.30p +2.23%
Coca-Cola HBC AG (CDI) (CCH) 1,146.00p +2.23%
SSE (SSE) 1,501.00p +2.18%
Hargreaves Lansdown (HL.) 1,174.00p +2.18%
Royal Dutch Shell 'B' (RDSB) 2,068.50p +2.12%

FTSE 100 - Fallers
Antofagasta (ANTO) 687.00p -2.83%
CRH (CRH) 1,687.00p -2.54%
Morrison (Wm) Supermarkets (MRW) 201.30p -2.19%
Schroders (SDR) 3,199.00p -2.11%
Tesco (TSCO) 237.15p -1.74%
GKN (GKN) 368.80p -1.44%
ARM Holdings (ARM) 1,189.00p -1.33%
Mondi (MNDI) 1,342.00p -1.32%
St James's Place (STJ) 930.00p -1.27%
G4S (GFS) 290.60p -1.19%

FTSE 250 - Risers
Premier Oil (PMO) 140.90p +17.22%
Hunting (HTG) 473.90p +8.54%
Lonmin (LMI) 119.70p +7.84%
Spire Healthcare Group (SPI) 354.70p +5.00%
Ophir Energy (OPHR) 122.00p +4.10%
Workspace Group (WKP) 863.00p +3.98%
Indivior (INDV) 185.00p +3.70%
Petrofac Ltd. (PFC) 855.50p +3.70%
Vesuvius (VSVS) 513.00p +3.43%
Aveva Group (AVV) 1,521.00p +2.98%

FTSE 250 - Fallers
Afren (AFR) 3.21p -14.14%
Allied Minds (ALM) 633.00p -3.65%
Alent (ALNT) 386.40p -2.87%
Carillion (CLLN) 338.20p -2.73%
Moneysupermarket.com Group (MONY) 270.10p -2.31%
AO World (AO.) 178.20p -2.14%
Thomas Cook Group (TCG) 150.60p -2.14%
Dechra Pharmaceuticals (DPH) 958.00p -1.94%
Essentra (ESNT) 996.50p -1.92%
Victrex plc (VCT) 1,864.00p -1.84%