Britain's FTSE recoups losses as oil price supports energy

Alistair Smout
Reuters Middle East

* FTSE 100 gains 0.1 percent

* BG Group leads oil and gas sector up

* Utilities gain from softer regulator stance

* Johnson Matthey hit by weak outlook

LONDON, Nov 21 (Reuters) - UK shares rebounded from early

falls for the second session in a row on Wednesday, with a

rising oil price supporting energy stocks to lead British blue

chips higher.

The FTSE 100 index gained 3.93 points, or 0.1

percent, to finish at 5,752.03 points in thin trade of only 85

percent of the average 90 day volume.

Energy stocks added 5 points to the index, supported by a

spike in the oil price, which gained more than $1 after a bomb

blast in Tel Aviv threatened to derail hopes for a truce between

Israel and Palestine and raised the prospect of a wider regional


"We have seen in the last couple of hours people coming in

for the energy names, albeit in low volumes," Steve Asfour, head

of sales trading at Fox Davies Capital, said.

"It's probably a read-across from the oil price spike and

there's some really depressed oil and gas stocks really coming

back into play."

One such stock was BG, which led FTSE 100 gainers,

rising 2.8 percent. The gas company had shed over a quarter of

its value in less than a month after forecasting no growth in

2013 in a trading update.

Utilities also supported the rise, led by a 1.9 percent rise

in United Utilities after a clarification by sector

regulators struck a more conciliatory tone.

"The softening of Ofwat's stance on a Competition Commission

referral reduces the near-term risk of negative newsflow and

highlights how important a consensus driven outcome is to this

process," JPMorgan said in a note.

Johnson Matthey lost 5.8 percent in heavy volume of

over three times its average 90 day volume. The precious metals

and commodity company fell after cautioning over an outlook

dented by weakness in both the United States and Europe.

Basic materials also suffered, with miners losing 0.5

percent as growth worries hit commodity prices.

The copper price fell 1.3 percent as the Federal

Reserve chairman cautioned over the prospect of growth in the

United States given tricky fiscal negotiations, and Greece's

international lenders failed to agree on an aid package for the


European finance ministers are to meet again about Greece on

Monday. Price moves and volumes were capped, with the U.S.

Thanksgiving holiday beginning tomorrow meaning that progress on

both fronts is likely to be delayed until next week at the


"It appears from the price action we've seen early on that

we're stuck in a tight range, probably until Monday," said Clive

Lambert, technical analyst at FuturesTechs.

"From a technical point of view, we had a very strong

session on Monday, following on from a rejection of the downside

on Friday. But the price action of yesterday and today is quite

uninspiring, and it doesn't look like we're going to head back

up towards 5,900."

UK stocks dropped 3 percent last week but their losses were

mostly reversed on Monday in the joint biggest single session

rise of the year.

(Editing by Stephen Nisbet)

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