BP results unlikely to lift gloom in share market

EARNINGS from oil giant BP could provide an anchor for Britain's volatile share market this week, but investors said war jitters and economic worries give little hope of a sustained rally in the short-term.

BP is one of a dozen blue-chip companies due to report results, and investors said although most should lend support, some could confirm tough times.

Full-year results from two of Britain's big four banks Barclays and Lloyds TSB will do little to dispel the gloom, with both set to report a fall in annual profits in the shadow of rising bad debts.

"Confidence is at rock bottom and with the spectre of war hanging over us you could not expect the market to make any positive progress...there are no immediate prospects for a sustained rally," said Derek Lygo, head of equities at fund managers First State.

The market was also unsettled by a surprise interest rate cut from the Bank of England on Thursday. The move left investors worried that unpublished economic data was pointing to a worse than expected slowdown.

The FTSE 100 share index nudged higher on Friday to advance 0.9% for the week to 3,600 points. The rise halted a run of four weekly falls, but trading has remained turbulent.

BP reports full-year results tomorrow, and is under pressure from investors after cutting output forecasts three times in the second half of 2002. Market reaction to figures from Britain's largest company will have a significant impact on the FTSE's direction not least because it has a 10% weighting in the index.

"We're neutral to slightly positive on BP; it won't be able to kick the FTSE up, but good results might mean the decline wouldn't be as quick," said Tim Parker, director of Stockcube Research.

Strong results from telecoms company BT Group on Thursday could also inject some optimism into the market.

"Stability is what we are really looking for, especially if we are coming up for war, and solid stock performance is something BT has excelled at in the past," said ING Financial Markets analyst Andrew Darley.

Attention will then be focused on the travel industry, with third quarter figures due from British Airways and traffic figures from airports operator BAA.

Among other major companies reporting are mining firm Xstrata, food groups Unilever and Cadbury Schweppes , utility Centrica and broadcaster BSkyB.

Results from Europe's biggest drugmaker, GlaxoSmithKline, due on Thursday are likely to be overshadowed by concerns about how the company will deal with competition from generic versions of its drugs.