FTSE closes in the black

A further sharp slide in oil prices helped power the London market to a positive close today as travel firms and airlines soared on the lower cost of crude.

Oil slipping below 114 US dollars a barrel at one stage boosted blue chips in late session trading, leaving the FTSE 100 Index 11.7 points higher at 5489.2.

Weaker mining stocks and a broker downgrade for Vodafone had dragged on the London market earlier in the day, despite cheer after lower-than-feared losses from Royal Bank of Scotland.

Lower oil prices also sent stocks on Wall Street soaring, with the Dow Jones Industrial Average up 2% in early trade.

Grim results from US mortgage giant Fannie Mae, whose second-quarter losses were more than triple expectations, failed to halt the crude-inspired rally.

In London, NatWest parent RBS rose 7.5p to 240.5p after fears of £1 billion-plus losses were not realised in its interim results. It reported a half-year deficit of £691 million and said it was comfortable with its balance sheet position.

The rest of the sector was mixed, with Barclays off 8.5p to 366.5p after its own results yesterday, while HBOS fell 2.5p to 332.25p, Lloyds TSB fell 0.75p to 318p and HSBC climbed 16p to 858.5p.

But it was travel firms and airlines that stole the show, with the sight of oil prices below 114 US dollars pushing Thomas Cook and British Airways to the top of the risers board with gains of more than 7%, up 17p at 237.25p and 20.75p to 275.75p respectively. TUI Travel lifted 17p to 237.5p.

Lower metal prices amid expectations of weaker economy activity meant miners dominated the fallers board, with Kazakhmys the biggest FTSE 100 loser, off 6% or 86p to 1248p.

BG Group bucked the downward commodities trend for a while after announcing a further crude oil discovery off the coast of Brazil. But excitement over BG’s sixth success at the deep-water Santos basin started to fade and shares lost their earlier 2% gain to stand 16p lower at 1090p.

Meanwhile, Vodafone managed to shrug off a broker downgrade, which had at one point caused the group to fall more than 1%.

Goldman Sachs downgraded the stock to neutral from buy and said it was concerned about weaker revenue growth in Europe, but Vodafone closed up 0.95p at 140.3p.

An upgrade from Goldman for Marks & Spencer supplier Northern Foods caused the company’s share price to lift 9% or 4.75p to 60p.

H Samuel and Ernest Jones jeweller Signet, also in the FTSE 250, enjoyed a second day of gains after an upgrade from Dresdner Kleinwort following reassurance yesterday over US margins.

Shares rose 7%, or 4p, to 59.25p.

The second tier risers board also featured a number of pub chains as investors returned to the sector following heavy falls in recent weeks. Punch Taverns enjoyed a gain of 7%, or 23.5p, to 358.75p, while Mitchells & Butlers gained 22p to 318p.

The biggest Footsie risers were British Airways up 20.75p at 275.75p, Thomas Cook ahead 17p at 237.25p, TUI Travel up 17p at 237.5p and Schroders up 64p at 1070p.

The biggest Footsie fallers were Kazakhmys down 86p at 1248p, Ferrexpo off 15.75p at 260.25p, Vedanta Resources down 91p at 1765p and Xstrata down 154p at 2990p.