Footsie edges higher as oil prices soften

Relief over a softening in oil prices continued for a second day today as the London market consolidated its position above the 4400 support level.

The FTSE 100 Index moved 2.2 points higher to close at 4407.5 despite worries that profit-takers might pile into the market after yesterday’s 36-point rise.

Positive sentiment was driven by the cost of a barrel of US light crude continuing to pull back from record highs, sliding below 46 US dollars in New York today.

But traders worried that this might only represent a blip in a long-term trend of higher oil prices, especially as demand builds during winter.

Paul Webb, a trader at deal4free.com, said: “Even though oil prices have fallen in the past three days, the general mood is that the 50 US dollars a barrel level will be tested once more in the not so distant future.”

Another trader called the bounce by the Footsie yesterday “an over-reaction”.

A sliding oil price proved unwelcome news to investors in Shell and BP, which fell 5p to 396.75p and 4.25p to 484.5p respectively.

Fines totalling £82.7 million were also confirmed against Shell today over its reserves crisis.

Miners were responsible for much of the pull back as investors saw the sector succumb to profit taking after a recent strong run.

Anglo American led the Footsie fallers with a 33p slip to 1251p, while Rio Tinto declined 28p to 1392p, BHP Billiton lost 9.5p to 527.5p and Chilean mining group Antofagasta retreated 10.5p to 986p.

British Airways was the most popular stock with investors as the declining oil price signalled lower fuel costs, although the airline suffered a series of cancellations causing disruption to thousands of passengers today.

BA shares rose 3% or 5.5p to 224.5p, while jet engine maker Rolls-Royce climbed 2.75p to 233.5p.

Media companies were also making progress, with Reuters – yesterday’s biggest Footsie loser – lifting 5p to 319.75p and Daily Mail & General Trust gaining 6p to 676.5p.

There was also a gain of more than 2% for property group Land Securities after it announced details of a plan to exchange its industrial sites for the retail interests of Slough Estates. Land shares were 28p higher at 1156p, while Slough rose 8p to 461p.

Elsewhere, Spanish takeover target Abbey National added 1.25p to 589.25p as speculation of a rival offer from HBOS continued to circulate. HBOS was down 2.5p at 678.5p.

Outside the top flight, shares in whisky maker Glenmorangie soared following its announcement that it was seeking a buyer. The most commonly held Glenmorangie A shares rose by 26% or 272.5p to 1330p.

Meanwhile, shares in engineering group Bodycote rose a penny to 139p after it revealed an 18% jump in profits, but forecast lower sales and higher costs in the second half.

The day’s biggest risers were British Airways, up 5.5p to 224.5p, Land Securities ahead 28p to 1156p, Schroders NV lifting 12.5p to 568p and Old Mutual adding 2p to 102.5p.

The biggest fallers were Anglo American off 33p to 1251p, Rio Tinto down 28p to 1392p, Scottish & Newcastle retreating 7.25p to 393.5p and BHP Billiton weakening 9.5p to 527.5p.