Oil prices affect FTSE

Oil prices reached a new record high today as the London market ended a volatile session in positive territory.

Crude’s fresh all-time peak above US$142 a barrel was good news for the oil giants but set nerves on edge elsewhere as the FTSE 100 Index swung between gains and losses.

The Footsie eventually closed 11.7 points ahead at 5529.9, despite another shaky start on Wall Street following a 3% fall for the Dow Jones Industrial Average in the previous session.

US and UK markets suffered badly yesterday on lingering inflation concerns and fears over the economic outlook amid rising commodity prices. Official figures today also showed UK growth at 0.3% in the first quarter of 2008 – lower than first thought – renewing fears of a recession.

In London, the Footsie’s energy stocks dominated the risers board on the soaring oil prices, led by prospector Tullow Oil, which gained 49p to 975p, or 5%. Cairn Energy was 121p better at 3207p, BG Group cheered 53p to 1251p and Royal Dutch Shell was 27p better off at 1962p.

Crude costs weighed on cruise ship operator Carnival, which fell almost 4%, or 62p to 1579p, although fuel-hungry airline British Airways recovered earlier falls to finish 1.75p higher at 213p.

The chief Footsie faller was heating and plumbing giant Wolseley, down 16p to 388p, after a downgrade from ABN Amro which feared for the group’s prospects in a deteriorating UK market.

Banks saw differing fortunes in a mixed session. FTSE 250 lender Bradford & Bingley led the sector lower with shares down almost 21%, or 16.75p to 63.25p, after the Resolution-led team of investors pulled plans to launch an alternative fundraising bid for the group.

Halifax Bank of Scotland spent much of the day trading below its 275p “discounted” rights issue price after investors overwhelmingly backed its £4bn (€7.6bn) fund-raising move yesterday, but the shares rebounded later to close at 278.5p, 2.5p up. Barclays however was a faller, off 5.75p at 298p, or 2%.

Tesco and Sainsbury’s were also on the back foot amid reports of a new price war brewing in the sector.

Sainsbury’s lost 6.25p to 308.75p, while Tesco – whose shareholders voted against a resolution from TV cook Hugh Fearnley-Whittingstall calling for the retail giant to improve its chicken-rearing standards today – shed 4.2p to 360.5p. Fellow supermarket Morrisons was also a faller, down 5.75p at 262.5p.

Defence giant BAE Systems meanwhile was more than 2% ahead, or 9p to 427.5p, after the group announced that chief operating officer Ian King would be taking over from chief executive Mike Turner from September 1.

Elsewhere coach, rail and bus group National Express rose nearly 3%, or 24.5p to 941.5p, despite the oil price hike as it gave a bullish outlook amid the switch to public transport.

The biggest Footsie risers were Tullow Oil up 49p at 975p, BG Group ahead 53p at 1251p, Lonmin up 129p at 3288p and Cairn Energy ahead 121p at 3207p.

The biggest Footsie fallers were Wolseley down 16p at 388p, Carnival off 62p at 1579p, Invensys off 9.25p at 262.75p and Thomson Reuters down 42p at 1317p.

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