Oil prices halt FTSE progress

Record oil prices and a painful session for media stocks ensured the London market’s recent progress came to a juddering halt today.

Pay-TV company BSkyB led the fallers with a decline of 17% after fourth quarter subscriber numbers fuelled worries about future growth rates.

BSkyB’s weakness dragged the rest of the sector lower, leaving the FTSE 100 Index down 39.7 points at 4390 by lunchtime, although the top flight did slip by as much as 52 points earlier in the session.

The slump came as continuing concerns about threats to supplies in Russia and Iraq pushed the price of a barrel of light crude in New York to a new record. Among those suffering from fears over higher costs, British Airways fell 6.5p to 222.5p while chemicals group ICI was down 1.25p at 229.5p.

Investors went in search of safer havens with the tobacco and utility sectors providing refuge.

Beneficiaries included NationalGrid Transco, which gained 2.75p to 445.75p and Imperial Tobacco, up 4p to 1198p.

But most stocks were in the red, with BSkyB down 102p to 500p as the detail in a 75% rise in annual profits disappointed analysts. In particular, the City was concerned about guidance that BSkyB may have to spend more on attracting new customers.

Among other media stocks, ITV fell 3.5p to 99.5p while Reuters was 10.75p lower at 310.5p and Financial Times owner Pearson slipped 17.5p to 595.5p.

The other heavyweight results announcement of the session also failed to catch the imagination of the City as Aviva gave back some of its recent strength to fall 18.5p to 546p. This was despite posting results showing a 37% rise in half-year operating profits to £1.13bn (€1.7bn).

The rest of the financial sector was under pressure with Abbey National down 2.5p to 575p after confirming further progress with its disposal of non-core assets – this time by holding talks to sell its French subsidiary.

Outside the top flight, online bank Egg continued to fall after owner Prudential announced yesterday that it was no longer planning to sell its 79% stake. Egg, which tumbled 28% last night, was down another 6% or 5.75p to 98.25p.

And shares in debt-laden British Energy weakened nearly 3% – off 0.5p to 21p - after its chairman rejected calls to revise the terms of a life-saving restructuring agreed last year.