Crude Hits FTSE

Ivaylo
03 Oct, 2006
New York City

BP, largest company in the UK, declined as the crude price fell below $61 a barrel amid concern about high US inventories. The volatile mining sector also dipped largely weaker, with Kazakhmys plunging. Xstrata bucked the downttrend among the miners after it announced a three-for-one rights issue to fund acquisition of Falconbridge of Canada. The FTSE 100 index lost 48.4 points, or 0.8%, to 5,908.8 by midday.

[R]9:30AM Crude oil prices press FTSE 100 lower by mid-day.[/R]
The FTSE 100 in London was lower by mid-day on Tuesday. The FTSE 100 index lost 48.4 points, or 0.8%, to 5,908.8 by midday.

In focus

Tesco announced that net profit rose to 791 million pounds ($1.48 billion) from 643 million pounds in a year-ago period that was two weeks shorter. The results were slightly ahead of analysts' expectations, with underlying pretax profit rising 12.5% to 1.15 billion pounds, just above the consensus forecast of 1.12 billion pounds.

Decliners

Oil stocks took a plunge due to the dip in crude oil prices. BP, the UK’s largest company, was down 2.2% and Royal Dutch Shell was 0.9% lower. The volatile mining sector was also largely weaker, with Kazakhmys down 2.3%. Steelmaker Corus, boosted by bid speculation in the previous session, lost 3.2%.

CSR, which hopes to see its bluetooth technology incorporated in Apple’s next generation of iPods, lost 6.5% while Wolfson Microelectronics, which makes chips for the music player, fell 2.8%.

Advancers

Shares of miner Xstrata rose 4% after it said that it's issuing 2.9 billion pounds ($5.5 billion) in discounted shares, to help refinance a $7 billion temporary facility to buy the Canadian miner Falconbridge.

Tesco rose 1.1% after reporting a 23% rise in first-half profit. The biggest supermarket operator in U.K. consolidated its position by cutting prices. William Morrison gained 0.7% and Sainsbury firmed 0.1%. ITV and British Airways, supported by takeover speculation in the previous session, gained 0.2% and 0.6% respectively.

Other news

Great Portland Estates, the London developer, is in talks to merge with rival London Merchant Securities in a deal that could value the latter at close to 1 billion pounds.

Smart Telecom the Dublin-based telecoms and ISP firm, has had its shares suspended after Eircom shut down a large part of its network. The move had been on the cards but Smart said it had managed to continue deferring the action on a weekly basis after having received such notices in recent weeks.