Steady oil prices push market gains

World markets staged a bounce back today as oil prices steadied and offset disappointing economic data in the UK and US.

London’s FTSE 100 Index rose 81.2 points to 6001.2 – a gain of 1.4% – as it fought back from recent hefty falls seen amid the ongoing political crisis in Libya.

Wall Street’s Dow Jones Industrial Average was also ahead, despite a downgrading of US GDP growth for the final quarter of 2010 to an annualised rate of 2.8%, from an initial estimate of 3.2%.

In London, investors were similarly undisturbed by revised UK GDP figures, which showed the fourth quarter decline was worse than feared at 0.6%, compared with the 0.5% first estimate.

The figures did hit the pound, however, which dropped to a one-month low against the dollar at 1.60.

Trading in the UK was thrown off course earlier in the session when a major technical glitch halted trading on the London Stock Exchange for more than four hours.

But easing oil prices cheered investors and the market pressed ahead after re-opening just after 12pm.

Speculation that the crisis in Libya may have cut oil supplies by less than previously estimated meant the price of Brent crude settled at around 111 US dollars, having spiked at nearly 120 dollars on Thursday.

Saudi Arabia, Opec’s biggest producer, also indicated that it was prepared to increase supplies in the face of the Libya turmoil.

The International Energy Agency added it could make up for any lost shipments from Libya by tapping into large surpluses held by member countries, which include the US, the UK, France and Germany.

In corporate news, Lloyds, which is 41% owned by the British taxpayer, reported pre-tax profits of £2.2bn (€2.6bn) – a marked improvement on the £6.3bn loss in 2009.

But analysts were spooked by comments that the slower UK economy and higher funding costs will prevent growth in margins this year.

The bank’s bad debt losses narrowed in 2010 to £13bn, from £23bn the previous year, but it saw an increase in international impairment charges driven by the impact of the Irish debt crisis.

Shares were 4% lower, a drop of 2.9p to 62.9p.

One of the biggest rises in the FTSE 100 came from BSkyB after the Financial Times said News Corp was close to an agreement with regulators about addressing competition concerns on its bid for the part of Sky it does not already own.

BSkyB shares were 4% or 31p higher at 786.5p.

Outside the top-tier, Rightmove shares jumped 5% – up 41p to 898p – after its profits surged 43% and it said it had started 2011 with record levels of activity.

The biggest Footsie risers were Arm Holdings ahead 34.5p to 608p, Weir Group ahead 84p to 1692p, Lonmin up 79p at 1829p and Burberry up 47p to 1187p.

The biggest Footsie fallers were Lloyds Banking Group down 2.9p to 62.9p, Reckitt Benckiser off 29p to 3163p, International Consolidated Airlines down 1.6p to 224.6p and Petrofac off 4p to 1378p.