As leading shares came off their best levels to close in negative territory after hitting a new intra-day record, Tullow Oil was the biggest faller in the FTSE 100 index.
The exploration and production group dropped 30p or nearly 8% to 357.3p on a number of concerns. Firstly, it has emerged that a boundary dispute between Ghana and Cote d’Ivoire could delay its TEN project, which is situated in the contested waters. Cote d’Ivoire has made a request to an international tribunal that Ghana suspend operations while the matter is considered. Tullow - which reportedly received around 85% of its revenues in 2013 from west and north Africa - now faces a period of uncertainty until the tribunal’s ruling, expected by the end of April. Tullow chief executive Aidan Heavey said:
It is our view that it is in the best interest of all parties that the TEN project continues to move ahead without delay and unencumbered by legal tactics of this nature.
Meanwhile the company’s recent share price falls means it is in danger of being ejected from the FTSE 100 when the next index review is unveiled on Wednesday, based on Tuesday’s closing prices. It scrapped its dividend last month after reporting a $2bn loss, partly due to the plunge in oil prices. It is likely to be replaced in the leading index by Jordanian drugmaker Hikma Pharmaceuticals, up 2p at £24.75.
Kathleen Brooks, research director at Forex.com, said the change could signal a more stable FTSE 100, albeit not immediately:
[The change} could mark a structural shift that could impact the FTSE in the coming quarters. As energy companies come under more scrutiny from regulators and a volatile oil price, their weighting in the FTSE could come under pressure. In contrast, sectors with more stable earning streams, like healthcare, could benefit.
Overall the FTSE 100 finished down 6.02 points at 6940.64, having earlier hit a new high of 6974, as continuing concerns about Greece’s financial troubles outweighed the prospect of quantitative easing from the European Central Bank this week, and despite reasonable manufacturing data from the UK, eurozone and US.
Mining shares reversed earlier gains as metal prices slipped back, after weak Chinese export figures and despite the country cutting interest rates over the weekend. Anglo American slipped 9p to £12.01 and BHP Billiton was down 21p at 1595.5p. But Glencore edged up 0.3p to 300.55p afer Credit Suisse raised its recommendation from neutral to outperform.
GlaxoSmithKline added 12.5p to £15.54 as it completed a complicated asset swap with Novartis, paving the way for a £4bn cash return to shareholders. The deal involved GSK buying the Swiss company’s vaccines business, sellling its cancer drugs operations and forming a consumer health join venture.
Banks were strong with Barclays 5.85p better at 262.75p ahead of results on Tuesday and Royal Bank of Scotland rising 11.1p to 378.3p.
Elsewhere Lloyd’s of London insurer Amlin lost 32.9p to 496.6p as it reported a 21% fall in profits and forecast worst reinsurance rates in 2015, and despite a special dividend of 15p a share. But rival Hiscox added 4p to 795p as profits fell 5.5%. Both said they felt no need to take part in a wave of mergers in the sector.
Game Digital dipped 2.1p to 260.9p as it bought Multiplay, which stages live events and manages game services and gaming platforms. In a hold note Liberum said:
We see excellent strategic rationale with strong cross-selling opportunities between Game’s mainly console-based business and Multiplay’s strengths with PC-based gamers. Cash remains strong; we forecast a 15p dividend this year plus a special dividend of at least 10p.
