FTSE down slightly after oil move

FTSE down slightly after oil move

A drop in oil prices triggered by a joint US and UK move to release strategic reserves pulled energy stocks and the wider FTSE 100 Index into the red today.

Britain and America have reportedly agreed to cooperate to dampen high oil prices in a bid to prevent higher costs from hitting economic growth, causing the price of Brent crude in London to dip nearly 1% to US$123.4 a barrel.

The FTSE 100 Index closed 4.7 points lower despite the boost given to markets by upbeat jobs figures in the US, which revealed unemployment benefit claims hit a four-year low in February.

The drop in oil prices hit the FTSE 100, with Cairn Energy falling 4.9p at 331.4p, BP sliding more than 1% or 6.5p at 620.5p and BG Group dipping 14p at 1527p.

The pound fell against the euro to 1.20 after credit agency Fitch put the UK's AAA rating on negative outlook. However, sterling was up against the US dollar at 1.57 as the greenback took a breather from yesterday's gains.

Supermarket chain Tesco was among the biggest fallers as chief executive Philip Clarke's decision to take on the UK role currently held by Richard Brasher fuelled nerves over trading this year in the wake of a recent profits warning.

Independent retail analyst Nick Bubb said it was not a good sign for the business when the chief executive has to "micro manage" the UK operation, although Panmure Gordon's Philip Dorgan kept his buy rating and argued that it was difficult for Tesco to have "two captains at the bridge".

Shares were 3.1p lower at 321.8p, a drop of nearly 1%.

Next was one of the leading top flight risers after Bank of America Merrill Lynch raised its price target to 2900p from 2750p ahead of the company's full-year results next week.

Next shares were up 74p to 2901p, a rise of nearly 3%, while Marks & Spencer continued to benefit from a more optimistic note on the retail sector from JP Morgan Cazenove yesterday.

M&S was up 4.3p to 375.1p, while outside the top flight PC World and Currys owner Dixons Retail Group lifted 0.8p to 15.97p and Simply Be catalogue firm N Brown added 5.2p to 238.5p.

There was no such rally for Argos owner Home Retail Group, which has remained under pressure after it reported an 8.5% drop in like-for-like sales at the catalogue chain in its most recent trading quarter.

The biggest Footsie risers were Lloyds Banking Group up 1p at 36.5p, Next ahead 74p at 2901p, Icap up 9.2p at 412.2p and Rio Tinto ahead 67.5p at 3547.5p.

The biggest Footsie fallers were Shire down 70p at 2158p, Randgold Resources off 200p at 6650p, Cairn Energy down 4.9p at 331.4p and Ashmore off 5.5p at 372.2p.

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