Events in Libya drive oil firms’ shares

OIL and gas explorer Cairn Energy helped to lead the Footsie higher yesterday as energy stocks across Europe received a boost from Libyan rebels entering Tripoli.

Brent crude prices fell as traders speculated that Libya could re-start oil production soon, but oil and gas companies enjoyed improving sentiment.

Edinburgh-based Cairn closed up 3 per cent or 8.3p at 289.7p ahead of today’s half-year results while Petrofac, the energy services firm with major operations in Aberdeen, soared 3.7 per cent or 43p to end the day at 1,211p after hiking its interim dividend.

Aberdeen-based rival Wood Group, which reports its interim results today, was up 2.2 per cent or 11p at 518.5p.

The wider FTSE 100 index closed up 54.54 points or 1.1 per cent at 5,095.3 – having touched 5,182.98 earlier in the session – as bargain-hunters and bottom-feeders re-entered the market following last week’s 5 per cent sell off.

Andy Ash, head of sales at Monument Securities, said: “Buying interest is favouring the safe havens and specifically the higher-yielding stocks.”

Gains came despite another poor performance for the banking sector, which saw further declines because of ongoing fears about the eurozone debt crisis and the downgrading of the sector by Deutsche Bank.

Taxpayer-backed Royal Bank of Scotland was the biggest loser, down 5 per cent, or 1.1p at 19.7p. Lloyds Banking Group was down 0.8p at 27.6p, and Barclays was off 4.3p at 146.3p.

The Dow Jones Industrial Average also supported the market when it rose 0.5 per cent in early trading as traders hoped Federal Reserve chairman Ben Bernanke would announce more stimulus measures in a speech on Friday.

The pound was down against both the dollar and the euro at $1.65 and €1.14 respectively.

Gold – seen as a safe haven investment – hit fresh record highs, rising to $1,895 per ounce. This boosted gold mining giant Randgold Resources, which was up 260p to 6,870p.

Outside the top flight, shares in software firm Micro Focus International fell 3 per cent as it confirmed takeover talks with two finance groups have come to an end due in part to recent volatility in stock markets.

The Newbury-based group had set a deadline of 19 August for a deal to be concluded but said today after receiving feedback from the potential bidders it had decided to terminate the talks. Shares fell 9p to 254p.

Among the Scottish stocks, shares in 3D Diagnostic Imaging – the Dundee-based maker of tooth-scanning equipment – were in sharp focus, with a 14.3 per cent or 0.25p to 2p. The company was at a loss to explain the rise, reporting normal trading volumes.

Other penny stocks were also on the front foot, with Edinburgh-based life sciences firm Angel Biotechnology up 15.9 per cent, or 0.04p, to 0.26p and Hawick-based cashmere maker Dawson International jumping 13.3 per cent or 0.25p to 2.13p.

One of the stand-out performances came from Cupid, the Edinburgh-based dating website operator, which embraced a 6.3 per cent rise, up 13p at 221p, after tying the knot with a group of Brazilian sites, continuing the firm’s international expansion as it enters South America.