A rise in the oil price lifted markets in early trading, but despite a later turnaround in crude, the market mood remained reasonably upbeat, albeit off its highs.
The reversal in oil followed a sell off in natural gas, with fears of oversupply amid low demand in the US thanks to the mild winter so far. Natural gas dropped as much as 8% while Brent crude - after touching around $62 a barrel - slipped 2% on the day to just over $60. Comments from Saudi Arabia that it would not intervene to support the crude price also sent oil lower. Jasper Lawler, market analyst at CMC Markets UK, said:
The correlation between entire stock indices and oil prices has been broken for now and seems likely to stay so while Brent holds onto its recent floor around $60. Stock markets rose alongside oil and the Russian ruble in early trading but as oil prices faded equities held onto gains.
So the FTSE 100 finished up 31.47 points at 6576.74 having earlier climbed as high as 6620. Alastair McCaig, market analyst at IG, said:
Last week’s equity charge higher has been added to today although not quite with the same gusto. The possibility of the last decade’s worth of higher closes in December for the FTSE ending is not mathematically over, but time is surely running out. A higher close in December for the FTSE, having dropped by 540 points in the first two weeks, was always going to be a tough ask.
European markets also moved higher, while on Wall Street the Dow Jones Industrial Average was nearly 90 points better by the time London closed.
Among the energy companies, Tullow Oil lost all its gains to close down 17.2p points lower at 407p. BG fell 15.2p to 886.1p while Weir, which supplies pumps and other equipment to the oil industry lost 31p to £18.74.
As gold slipped back, Randgold Resources fell 281p to £41.50.
Among the risers, Kingfisher climbed 5.9p to 330.1p as it sold a 70% stake in its loss-making Chinese business to Wumei Holdings for £140m.
Afren added 1.82p to 49.39p as the oil explorer revealed a bid approach from Nigeria’s Seplat Petroleum Development.
But Pets at Home dropped 12.7p to 199.1p. Analysts struggled to find an explanation, beyond pointing to possible increased competition. Traders also said that there was a spike higher in late trading on Friday as funds adjusted their index holdings, and the day’s fall had reversed that.
Argos owner Home Retail, up 10.1p to 201.8p, received an early Christmas boost from analysts at RBC who moved from underperform to outperform and raised their price target from 175p to 230p.
Premier Oil dipped 5.1p to 166p amid the oil price slide, despite completing the sale of a handful of unwanted fields ifor $147.5m in cash.
WANdisco jumped 50p to 462.5p after the data and software company announced a $475,000 deal with dunnhumby, the business behind analysing customer information from Tesco Clubcards. The contract win is the first following a partnership between WANdisco and US group Oracle announced in July. Analyst Roger Phillips at Investec said:
WANdisco’s latest...contract win is important in terms of client referenceability, with dunnhumby being a high profile data management name. In addition, the contract is the first win through the Oracle sales channel, which could become material in time. Momentum is now starting to build for the group’s Hadoop offering, and we retain our buy and 1275p target price.
But Haynes Publishing, the company behind car and motorcycle repair manuals, said trading remained soft since it reported in October that key retailers were working their way through their inventories rather than ordering new stock. It said as a result it only expected to report a small profit for the first six months, and its shares fell 11.5p to 157.5p.
Aim-listed Pure Wafer lost 11p to 47p ater the silicon wafer specialist suffered a fire at its Swansea plant on Sunday. There were no injuries but the fire caused significant damage to the site. It intends to switch some production to its Arizona facility as a result.
Finally oil producer Nostra Terra added nearly 15% to 0.235p after chief executive Matt Lofgran said over the weekend that the company could remain cash flow positive for some time even if the oil price was below $50 a barrel, with further cash for investment.
