BP promises fail to stimulate FTSE

Hopes of a turnaround at oil major BP failed to lift the London market into positive territory today.

More positive sentiment around the firm – despite profits falling 22% – was offset by losses for banking stocks as the FTSE 100 Index struggled to make headway.

By mid-morning, the Footsie was 18 points lower at 6008.2 after briefly slipping below the 6,000 mark earlier in the session.

The leading riser was heavily-weighted BP, which saw shares advance almost 3%, or 15p, to 557p in spite of the profits drop.

Investors – hopeful the group may have seen the worst of its problems after a difficult 2007 – were also cheered by a 25% dividend hike and chief executive Tony Hayward’s plans to revive the business.

Rival Royal Dutch Shell followed BP’s gains, up 24p to 1789p, while oil and gas explorer BG Group gained 13p to 1135p.

Among the fallers, banks slowed the benchmark index’s progress, amid downgrades from brokers as the sector’s reporting season loomed.

Royal Bank of Scotland fell more than 2%, or 9.25p, to 396.25, Barclays slipped 11.5p to 469.75p, and HSBC was off 7p at 771p.

Downgrades also hit other blue-chips such as supermarket chain Morrisons – off 9.5p to 295.5p – after Lehman Brothers said the shares looked expensive.

In a poor session for the retail sector, fashion chain Next fell 50p to 1472p after a Panmure Gordon downgrade and Argos owner Home Retail Group was off 10.75p to 282.25p. The leading Footsie faller was B&Q owner Kingfisher, which fell 6%, or 9.3p, to 144.3p.

In the FTSE 250, Mike Ashley’s Sports Direct International gained 4.5p to 110.25p – or 4% – after the Sports World entrepreneur signed an agreement with a major Chinese retailer.

But retailer Carpetright was down more than 5%, or 42.5p, to 779p, after warning it would struggle for sales growth in a tough trading environment.