Market report: Oil price optimism boosts equities

THE Footsie bounced higher yesterday during a shortened session that followed a severely-delayed opening, which the London Stock Exchange blamed on a problem with "market data".

At the close, the FTSE 100 index was up 81.22 points, or 1.4 per cent, at 6,001.2, with trading having begun at 12:15pm following the technical fault.

Michael Hewson, market analyst at CMC Markets, said: "Even without that interruption, equities had a much firmer tone."

Markets around the world were helped after oil prices steadied, offsetting disappointing economic data in both the UK and the United States.

Wall Street's Dow Jones Industrial Average was ahead in early trading, despite a downgrading of US gross domestic product (GDP) growth for the final quarter of 2010 to an annualised rate of 2.8 per cent, from an initial estimate of 3.2 per cent.

In London, investors were similarly undisturbed by revised UK GDP figures, which showed the fourth-quarter decline was worse than feared at 0.6 per cent, compared with the 0.5 per cent first estimate. The figures did hit the pound, however, which dropped to a one-month low against the dollar at $1.60.

Speculation that the crisis in Libya may have cut oil supplies by less than previously estimated meant the price of Brent crude settled at about $111, having spiked at nearly $120 on Thursday.

Saudi Arabia, the biggest producer in the Organisation of Petroleum Exporting Countries (Opec), also indicated that it was prepared to increase supplies in the face of the Libya turmoil.

The International Energy Agency added it could make up for any lost shipments from Libya by tapping into large surpluses held by member countries, which include the US, the UK, France and Germany.

In corporate news, Lloyds Banking Group, 41 per cent of which is owned by the taxpayer, reported pre-tax profits of 2.2 billion - a marked improvement on the 6.3bn loss in 2009.

But analysts were spooked by comments that the slower UK economy and higher funding costs will prevent growth in margins this year.

The bank's bad debt losses narrowed in 2010 to 13bn, from 23bn the previous year, but it saw an increase in international impairment charges driven by the impact of the Irish debt crisis. Shares were 4 per cent lower, a drop of 2.9p to 62.9p.

One of the biggest rises in the FTSE 100 came from BSkyB after the Financial Times reported News Corp was close to an agreement with regulators about addressing competition concerns on its bid for the part of Sky it does not already own.BSkyB shares were 4 per cent or 31p higher at 786.5p.

Outside the top-tier, Rightmove jumped 5 per cent - up 41p to 898p - after its profits surged 43 per cent and the estate agency said it had started 2011 with record levels of activity.

Among the Scottish stocks, Aggreko enjoyed a 2.6 per cent boost - up 36p at 1,425p - after analysts at RBC Capital Markets upgraded their recommendation on the Glasgow-based temporary power supplier from "sector perform" to "out-perform" and raised their target price from 1,520p to 1,585p after recent under-performance by the stock.