Late oil surge hits FTSE before close

A late surge in oil prices dashed hopes of a positive start to the trading week in London.

The FTSE 100 Index advanced more than 34 points in the first two hours of trading, but saw its gains slowly eroded until it closed the session 2.5 points lower at 4428.9.

News that Saudi Arabia was preparing to raise its supplies to over 9 million barrels a day in June to satisfy customer demand boosted sentiment.

But negative noises from other members of oil cartel Opec over possible production rises helped to shackle the optimism.

Wall Street suffered a similar turnaround, with the Dow Jones Industrial Average sliding into the red after racking up gains of 40 points earlier in the day.

Chemicals group ICI had flirted with the top of the risers board, but switched into reverse gear once oil prices began to rise, finishing 1.5p lower at 203p.

Oil giants Shell and BP fared better, up 1.5p and 3.5p to 393.5p and 482.25p respectively.

An announcement from Shell that it was lowering its reserves by a further 120 million barrels failed to have a negative impact on the group’s share price.

Shares in British Airways were squeezed by rising oil prices and its offer of a package of ticket discounts on long-haul flights.

Investors worried about the likely erosion to margins as the stock fell 2.25p to 252.5p.

Brewing giant SABMiller was toasting an 6.5p rise to 673p after formally launching its offer to take over the Harbin Brewery Group – the fourth largest brewer in China.

Among companies reporting today, fashion brand Burberry added 5.5p to 375.5p after saying a “terrific” year for the group had been helped by a strong performance by its womenswear division.

Fellow FTSE 250 stock leisure firm De Vere was also on the rise – up 1.75p to 436.75p – as a major investor upped its bid for a larger stake in the group.

But music group EMI lost 12% or 30p to 217p following a strong run for shares ahead of its full-year results, which were in line with market expectations.

The biggest Footsie risers were Hays up 2.5p at 118.5p, mmO2 ahead 2p at 96.25p, Royal & Sun Alliance up 1.5p at 77.75p and William Hill ahead 10p at 530p.

The biggest fallers were Anglo American down 14p at 1118p, BHP Billiton off 5.5p at 458.5p, InterContinental Hotels down 6p at 502p and Rentokil Initial off 1.5p at 146.5p.