FTSE calms after oil worries

A steadier performance for oil prices and a doubling in annual profits at the world's biggest silver miner boosted confidence in London today.

The FTSE 100 Index rose by more than 40 points early in the session, although the top flight later slipped back to stand 2.6 points higher at 5996.5.

Banks again acted as a drag on the market, while retail stocks were dealt a blow by a second pessimistic update from the sector in as many days.

On a positive note, Brent crude remained near $112 a barrel as traders bet that safer supplies can continue to meet demand, despite the ongoing crisis in oil-producing Libya and uncertainty elsewhere in the region.

Among commodity stocks on the front foot, Antofagasta lifted 19p to 1426p, Lonmin cheered 49p to 1885p and African Barrick Gold improved 7.75p to 586.75p.

Mexican miner Fresnillo jumped 3% - up 49.5p to 1643.5p - after record silver and gold prices and higher production ensured its profits hit $1bn (€724.24) for last year. The company also said it would invest $800m (€579.4m) in projects this year.

Fresh from Primark's warning yesterday of subdued trading since January, retail stocks were further hit by HMV's second profits alert this year.

Next dropped another 28p to 1948p, Marks & Spencer declined 7.75p to 338.65p and B&Q owner Kingfisher fell 5% or 11.6p to 242.8p. HMV, which also warned it would breach certain terms on its bank loans, slumped another 3.75p to 17p.

HSBC shares remained under pressure after its warning on Monday that its higher regulatory burden will impact future profitability. Shares fell another 16.25p to 661.75p after dropping 5% yesterday.

Barclays, which announced a deal to buy one million credit card accounts from internet bank Egg, fell 2.6p to 317.35p.

Elsewhere, housebuilders fell back despite improved full-year profits from Persimmon and a rare month of house price growth, as reported by Nationwide.

Persimmon said it had started the year in positive fashion, but with the group remaining cautious about trading prospects shares slipped 20.5p to 449.9p in the FTSE 250 Index. Bellway dropped 16p to 657p and Redrow fell 6.65p to 128.65p.

Back in the top flight, shares in Capita jumped 5%, up 34p to 759.5p, after the support services firm said it was in discussions with Zurich Financial Services about a potential extension of the pair's existing UK contract.

The rise built on gains seen after strong results from Capita last week.