FTSE: 6,005.09 (+90.20) Mid-250: 11,652.37 (+109.00) Small Cap: 3,248.35 (+13.19)
A REBOUND by commodity issues fuelled strong gains by Britain’s top share index yesterday, as oil prices fell back on hopes for a peace deal in Libya, easing concerns over global economic demand.
At the close, the FTSE 100 index was up 90.20 points, or 1.5 per cent, at 6,005.09, ending above the 6,000 level for the first time since February 21st, having fallen in eight of the previous nine trading days.
“The sun has come out today in true ‘risk-on’ style, and after three days of suffering, London’s headline-index is trying to turn positive for the week,” said Will Hedden, sales trader at IG Index.
Heavyweight energy issues and miners led the rally, with the two sectors having been hit recently by fears that the rising cost of oil could derail a fragile global economic recovery, damping demand for commodities.
Brent crude fell below $115 a barrel, with the Libyan government having accepted a plan that seeks a negotiated solution to the revolt in the north African country, a spokesman for Libyan ally Venezuelan president Hugo Chavez said.
Oil explorer Tullow Oil was a good gainer, up 3.9 per cent after announcing an oil discovery offshore Ghana.
“While the oil price remains high, we believe the outperformance will continue (for Tullow),” said Richard Curr, head of dealing for CFD specialist Richard Curr.
He said Tullow stock was a “buy”, with a target of 1,500 pence plus in the coming weeks, though he recommended “a tight stop loss to take into account any oil-price-driven volatility”.
Xstrata was a strong performer among the miners, up 2.6 per cent after stakeholder Glencore reported bumper profits.
But gold miners African Barrick Gold and Randgold Resources missed out on the sector rally as the price of the precious metal fell, with recent safe-haven-related demand softened by the peace possibilities in Libya.
Travel firms benefited from an easing in worries over higher fuel costs, with TUI Travel adding 4.6 per cent.
TUI Travel was also boosted as German parent TUI’s board gave the go-ahead for a possible initial public offering (IPO) of container shipping group Hapag-Lloyd, raising hopes for a mop-up bid for the British firm.
