Markets: Scots oil stocks ride the relief wave

SCOTTISH oil stocks staged a comeback yesterday as a strong opening on Wall Street helped to soothe fears over the United States' economy slipping back into recession.

Cairn Energy, the Edinburgh-based oil and gas explorer drilling off the coast of Greenland, ploughed ahead by 4.2 per cent or 12.2p to 306.1p as brent crude prices see-sawed between $104 and $108 a barrel.

Fellow Edinburgh-based explorer Melrose Resources was up 3.4 per cent or 6.25p at 190.25p, while Aberdeen's Xcite Energy rose by 5.5p or 4.7 per cent to close at 122p. But the stand-out Scots energy stock was Bowleven after the Aim-quoted driller jumped 16.1 per cent or 18.75p to end the day at 135p following news it had started a third well off the coast of Cameroon.

On the wider markets, the FTSE 100 index bounced back into the black, closing up 155.67 points or 3.1 per cent at 5,162.83 after the Dow Jones soared by nearly 300 in early trading.

The number of Americans signing up for unemployment benefits last week fell below 400,000 for the first time in four months, helping to ease jitters caused by rumours regarding the health of the French banking sector.

Some of those fears were quelled when France's biggest bank, Societe Generale, asked the regulator to investigate the rumours surrounding it, claiming they are unfounded. Talk of a short-selling ban also boosted financial shares.

Michael Hewson, market analyst at CMC Markets, said: "Equity markets have endured another roller coaster session of volatility. US markets opened higher after Wednesday's plunge, with a particular focus on this week's jobless claims."

The improved mood helped the pound, which rose to $1.63 against the dollar, while sterling held steady against the single currency at €1.14.

Mining and energy stocks were among the biggest risers, with Essar Energy up 8 per cent, or 20.8p, at 282.9p and BHP Billiton ahead 100p at 1,966p.

Aim-quoted Nautical Petroleum leapt 15.3 per cent or 36.5p to close at 275p after finding oil in its Kraken well in the North Sea.Evolution Securities said it could be worth 492p-a-share.

Banking shares were particularly volatile as they were affected by the developments overseas but they closed on a high.

HSBC was up 19.6p at 535.8p, Royal Bank of Scotland added 1p at 25.3p, Lloyds Banking Group rose 1.4p at 32.2p, while Barclays gained 14.2p at 177.9p.

There was little in the way of corporate news to drive markets, with one of the main gains outside the top flight coming from Bloomsbury after the publisher noted "significant improvement" in sales throughout July and early August, due in part to strong e-book performance during the holiday season.

The update on the day of the company's annual meeting gave a boost to shares in the publisher, which lifted 3.5p to 104.5p.

Online food delivery firm Ocado suffered another shares drop after it was reportedly downgraded by Goldman Sachs, which helped the business float last year. The grocery firm, which has recently suffered slowing growth because it lacks capacity to meet demand, saw it shares fall 1p at 132.5p.