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Rising energy stocks lift Britain's FTSE

Published 12/14/2010, 11:58 AM
Updated 12/14/2010, 12:04 PM

* FTSE 100 index up 0.5 percent to 30-month closing high

* Oils lead; BP helped by vague bid talk

* Miners retreat after recent rally

By Jon Hopkins

LONDON, Dec 14 (Reuters) - Britain's leading share index pushed higher on Tuesday, led by energy stocks with BP boosted by Royal Dutch Shell bid interest talk.

The FTSE 100 index ended up 30.46 points, or 0.5 percent at 5,891.21, a closing level not seen since June 2008.

"Volumes remain thin, but the FTSE keeps going up, with oils adding the main fuel today, although whether the 5,900 level can be breached without more momentum is a big question," said Mic Mills, head of electronic dealing at ETX Capital.

Integrated oils gave the blue chips strength, although the crude price slipped back following strong gains made on Monday after data highlighted continued growth from China.

BP was the biggest FTSE 100 riser, up 3.2 percent as traders cited vague talk of potential bid interest from Shell, ahead 1.4 percent. Both companies declined to comment.

BP was also supported by its announcement that it would sell a portfolio of oil and gas assets in Pakistan for $775 million, above analysts' forecasts.

In addition, oil majors were helped by a bullish note from Credit Suisse which raised its oil price forecasts for 2011 and hiked target prices across the sector.

The broker reiterated that BP was its top sector pick.

Among individual blue chip gainers, outsourcing firm Serco gained 2.1 percent after being selected as preferred bidder for a prison management contract in New Zealand, valued at around 190 million pounds.

And Scottish & Southern Energy added 1.2 percent after newspaper reports revived possible takeover interest in the mulit-utility.

MINERS MISS OUT

Miners were the biggest blue chip fallers, retreating after gains on Monday, with Lonmin shedding 1.1 percent.

Whitbread, however, was the top FTSE 100 decliner, down 2.8 percent despite posting strong profit growth. Panmure Gordon downgraded its rating to "hold", saying it did not expect consensus expectations to be raised.

Tour operator TUI Travel fell 0.6 percent as its German parent company TUI AG posted full-year results, and as JP Morgan Cazenove cut targets for both TUI Travel and mid-cap peer Thomas Cook, down 0.9 percent.

Elsewhere on the second line, housebuilders provided the main support led by Persimmon and Redrow, up 5 and 4 percent respectively, after a survey said the decline in house prices in England and Wales was at a slower pace in November than analysts had expected.

British consumer price inflation, however, rose unexpectedly to a six-month high of 3.3 percent in November, which could increase the pressure on the Bank of England to raise interest rates.

U.S. monetary policy was being debated at the last Federal Reserve Open Market Committe meeting of 2010 on Tuesday, although analysts expected no changes when the Fed's announcement is made at 1915 GMT.

U.S. blue chips were up 0.6 percent by London's close supported by stronger than expected U.S. retail sales data. (Editing by David Cowell)

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