London markets make modest gains

The London market made modest gains today despite falling crude oil prices dragging down energy stocks.

The sector was also on the back foot after oil and gas explorer BG Group was frustrated in its £6.6 billion bid to buy Australian firm Origin.

However, better sentiment around banking stocks – and transport firms buoyed by crude below 126 US dollars a barrel – left the wider FTSE 100 Index 19.5 points higher at 6087.6 by mid-morning in subdued trading.

British Airways was the leading Footsie riser – gaining 15p to 230p, or 7%, as investors’ hopes of a cheaper fuel bill for the airline rose. In the FTSE 250 Index easyJet lifted 2p to 297p despite UBS lowering its target price and news that business-class airline Silverjet had suspended operations because of a funding crisis.

Other fuel-dependent stocks in good spirits today included cruise ship firm Carnival and rail and bus operator FirstGroup, up 56p to 1921p and 21.5p to 530p respectively.

The oil price reverse had the opposite impact on energy giants BP, off 10.5p to 602p, and Royal Dutch Shell, which slipped 38p to 2107p.

Meanwhile BG shares fell 44p to 1250p with investors fearful that the firm may come back with a higher offer for its Australian target.

The mining sector put pressure on the Footsie after lower metal prices meant BHP Billiton eased 33p to 1927p and Rio Tinto dipped 62p to 6118p.

However, many banks were up after positive comments on the financial strength of the UK banking sector from rating agency Moody’s. Alliance & Leicester cheered 23p to 443.25p, Lloyds TSB added 12.5p to 389.5p and Barclays rose 12p to 389.5p.

One of the biggest risers in the FTSE 250 Index was Currys owner DSG International following an upgrade by Morgan Stanley. Shares rallied 3p to 59.5p.