Oil stocks drag down FTSE

Oil stocks dragged the FTSE 100 Index into the red today despite renewed takeover speculation surrounding Scottish Power.

Shares in Scottish Power cheered more than 3% as rumours that Scottish & Southern Energy (SSE) was considering a merger to rival a bid by Powergen owner E.On swept the market.

But the latest dip in crude prices sent shares in oil heavyweights Royal Dutch Shell and BP down, leaving the Footsie off 2 points at 5421.6 by mid-morning.

It came as one trader warned profit-takers were likely to move in on the back of the top flight’s recent rally, which saw it climb more than 200 points in the last two weeks.

BP and Shell fell 7p to 631p and 25p to 1824p respectively, while smaller rival Cairn Energy was off 40p at 1762p.

Mining stocks also felt the chill, with Xstrata top of the fallers board, down 35p at 1271p. Fellow explorer BHP Billiton slid 12p to 24p while Antofagasta was off 20p at 1460p.

And retailers were weak as hopes of a cut in interest rates before Christmas faded. Marks & Spencer was off 3p to 430p while Next was down 10p to 1346p.

There was better news for Scottish Power, which stood at the top of the blue-chip leaders’ board up 18.5p to 578.5p.

Investors welcomed the prospect of a tie-up with SSE which would create a £19bn (€28bn) utility giant north of the border, although SSE shares were off 3p to 980p.

On a quiet day for corporate news, much of the focus was on smaller firms.

Budget carrier Ryanair fell more than 2% or 16c to €6.82, as it revealed profits rose by 18% in its first half, but added that the amount it earns per passenger will be 5% to 10% lower in the final quarter of the year.

And rival easyJet eased 3.5p to 300.5p after it revealed its planes were less full than a year ago despite an increase in passengers.