Footsie slips on Libyan oil flow fears

Libya's ongoing civil unrest pushed the Footsie into the red again yesterday as oil prices continued to surge.

But the benchmark share index fought back from a low of 5,926.55 at one point to close just 18.04 points lower at 5,996.76, a drop of 0.3 per cent.

The market was boosted by bumper consumer confidence figures from the United States.

Martin Dobson, head of trading at Westhouse Securities, said: "The 6,000-level will be a hard one to hold in the short-term until the situation in the Middle East has a bit more direction."

The Dow Jones Industrial Average was down 0.9 per cent in early trading and the Nasdaq Composite Index fell more than 1.7 per cent as Wall Street reopened following Monday's public holiday and as US investors caught up on events in North Africa.

European markets were also hit by a poor session in Asia amid the Libyan turmoil, and on rating agency Moody's decision to downgrade the outlook on Japan's credit rating for the first time in nearly nine years.

Oil prices remained near two-and-a-half-year highs as fears continued to mount over world oil supplies on concerns that Libya's crude exports of one million barrels a day could be affected as foreign oil companies evacuate staff from the country. Brent crude for April delivery hit more than $108 a barrel at one stage.

The rising oil price gave support to the dollar, which was up at $1.61 against the pound. Sterling was down to €1.18 following speculation that the European Central Bank would raise interest rates sooner than previously anticipated.

Better-than-expected UK borrowing figures offered limited support to stocks, despite a 3.7 billion surplus for Britain's public finances in January thanks to a bumper tax haul.

Airline and travel stocks were particularly hard hit on fuel cost worries, with the merged British Airways and Iberia group International Consolidated Airlines down 1.3p to 238.2p.

Tour operators were also under pressure, with Thomson parent TUI Travel down 2.5p to 243.3p and Thomas Cook falling 3.6p to 194.4p.

Oil giant BP benefited from surging oil prices and confirmation of its second deal in as many days as it revealed plans to sell several assets in the UK. Shares edged ahead 1.2p to 492.8p.

Shares in Deo Petroleum edged up 0.5p to 57p after the Aberdeen-based oil and gas explorer named industry veteran Michael Cooper as vice president for exploration and subsurface.

Engineering firm BAE Systems was the top Footsie faller after the House of Commons' public accounts committee said defence equipment projects are over-spending, leading to speculation that the UK government may need to renegotiate contracts. Shares in BAE were down 4 per cent or 14.7p to 326.8p.ProStrakan, the Borders-based drugs developer that on Monday accepted a 292m takeover bid from Japanese peer KHK, was up 1.5p at 133p after receiving regulatory approval to sell one of its drugs in Canada. KHK has offered 130p a share.

Dutch drugs firm Norgine - which has been touted by analysts as a possible suitor for ProStrakan - increased its stake in the Galashiels firm from 13 per cent to 14.4 per cent.