City focuses on oil stocks as Footsie rises

The FTSE-100 Index was ahead by 18.3 points at lunchtime to stand at 5195.7, although trading volumes were predictably thin in the first trading day after Christmas.

Shell and BP provided much of the interest for those traders working on the half-empty trading floors.

Speculation that Opec will announce output cuts of 1.5 million a barrels a day helped push crude oil prices towards the $21 a barrel mark and boosted Shell's share price by 3¼p at 478¾p; and BP's by 2p to 532½p.

The telecoms sector was among areas performing well, with mm02 ahead ¾p at 88¾p; Vodafone up 2¼p at 181¼p; Cable & Wireless up 2½p at 322½p; and BT Group gaining 1p at 249½p.

Safeway was up 4¼p at 315¼p; Morrison's rose ¼p to 202½p; Marks & Spencer recovered from an earlier dip to gain ¼p at 357¾p; while Dixons staged a similar rally to rise 1½p to 238p.

Banks were enjoying a generally strong session, with HBOS up 28p at 814p to lead the Footsie risers' board; Barclays gaining 7p at £22.47; Lloyds TSB rising 8p to 748p; and Royal Bank of Scotland improving by 13p to £16.78.

But HSBC bucked the trend, falling 6½p to 801½p.

Elsewhere, South African financial services group Old Mutual fell 2½p to 85p as the rand continued to weaken.

Shares in P&O Princess rose by 3p to 398p as American firm Carnival reaffirmed its £3.1bn bid by filing for regulatory clearance in the US.

Outside the Footsie, forecasts that house price growth next year would be only half the current level resulted in shares in housebuilder Persimmon falling by 10p to 372p; while John Laing dipped 3½p to 151½p.