Oil price worries again holding FTSE back

Fresh supply worries pushed oil prices back to record levels today and helped squash any hopes of a much-needed rally for London shares.

The price of oil in New York was again above the $45 (€36.70) a barrel mark - adding to the nerves of investors already worried about retail sales data in the United States later today.

By lunchtime, the FTSE 100 Index had given back most of the 30-point gain achieved earlier in the session to stand 6.9 points higher at 4319.1.

The indifferent performance in London also reflected mixed news on the earnings front with Royal & Sun Alliance pleasing with half-year figures but FTSE 250 Index estate agency group Countrywide warning of a weaker house market.

R&SA led the list of Footsie risers – up 3% or 2p to 70.75p – following a reassuring set of half-year results.

Operating profits of £301m (€449.6m) were in line with expectations while R&SA also said it was confident its balance sheet complied with the new regulatory capital regime for insurers.

Most banking stocks were in the black as takeover speculation continued to excite the sector. Barclays, which has been linked to an approach from Citigroup, added another 4p to 515.5p and HBOS cheered 9.5p to 672.5p.

Elsewhere, Shell recovered some of yesterday’s losses after the Financial Times said the oil giant had hired bankers to assess the possibility of a merger of its Dutch and British holding companies. Shares lifted 3.75p to 393.5p, while rival BP rallied 2p to 496.5p.

Media stocks were among the heaviest fallers, led by BSkyB, which weakened 12.5p to 464.5p.

Advertising giant WPP slipped 9.5p to 468p and Reed Elsevier lost 6.5p to 471.5p.

British Airways also slipped as energy costs rose – falling 3p to 206.75p.

Outside the top flight, Countrywide tumbled 14% or 44p to 276p as it revealed it had arranged 25% fewer sales in July than a year earlier. The decline came despite a healthy set of half-year figures from the UK’s biggest estate agency group.

Manchester United followed Countrywide lower on the FTSE 250 Index fallers board, easing 10p to 245p as speculation earlier this week linking US tycoon Malcolm Glazer to a takeover bid subsided.

Ports and ferries group P&O fared better, rising 17p to 223.25p, as it delivered a largely positive outlook, despite continued tough conditions for its ferries business.

Back in the Footsie, Shire Pharmaceuticals was in the black, up 5p to 456p, after saying it had won approval for its flagship Adderall XR drug for adults in the United States.