With crude prices continuing to fall - Brent is down nearly 2.5% at below $49 a barrel - travel companies are benefiting from cheaper fuel costs, and helping lift the market higher.
Cruise company Carnival is up 74p at £30.90, helped by analysts at Natixis raising their recommendation from neutral to buy, while British Airways owner International Airlines Group has climbed 4.5p to 469.9p.
But the biggest riser so far is engineering group GKN, up 11.3p or more than 3% to 349.1p after Credit Suisse issued an outperform rating and lifted its target price from 380p to 410p. The bank said:
Despite automotive accounting for around 59% of 2015 estimated group revenue, investor attention is often focused on the (smaller) aerospace division. However, we are of the view that automotive and in particular Powertrain /Drivetrain applications (around 53% of group revenue) offer potential to deliver upside surprise to group earnings consensus estimates, particularly in 2016.
Overall the FTSE 100 has added 32.74 points to 6533.88, despite continuing concerns about the outcome of the forthcoming Greek elections and nervousness ahead of next week’s European Central Bank meeting.
Shire has climbed 21p to £47.62 as the group unveiled the $5.2bn acquisition of US group NPS Pharmaceuticals. The move prompted talk of further consolidation in the sector. Jefferies said:
We see a strong strategic rationale as NPS complements Shire’s strength in both gastrointestinal and orphan diseases, plus offers substantial double-digit earnings per share accretion from 2016 of at least 12%. Shire still has significant balance sheet flexibility, including a $9bn debt capacity, to further boost growth and pipeline, in our view.
Elsewhere AO World has jumped 18.9p or nearly 8% to 266p after the online domestic appliances specialist reported a strong third quarter including Black Friday and Christmas. Sales were up 26% overall in the three months, and it was confident of meeting full year expectations. In a buy note Numis said:
We leave our forecasts unchanged but are encouraged by the robust performance through Black Friday, a ‘pleasing’ performance from the audio visual category, and the ahead-of-plan volume capability build in Germany.
But Standard Chartered has dropped 23.1p to 922p after both Jefferies and JP Morgan cut their target prices.
Centrica is down 5p at 263.8p and SSE is 37p lower at £15.58 after Labour said it would push for price cuts if it was elected this year.
Energy companies have also been affected by the low oil price, with BG down 6.4p to 823.7p and Royal Dutch Shell B shares 15.5p lower at 2144.5p.
Housebuilders have continued recent declines despite a confident statement from Taylor Wimpey, down 1p at 124.7p. Barratt Developments has slipped 7p to 424.4p.
