FTSE 100 Index Up 5%, Oil Rebounds

123jump.com Staff
17 Oct, 2008
New York City

Crude oil prices rebounded in London trading on a speculation that member nations will agree on a revised production quota imposed by OPEC. The association advanced its meeting next week to set price and production targets. Iran and Venezuela are leading the charge for production freeze.

[R]1:00AM New York, 6:00PM London – Higher oil prices lift UK market index up 5%.[/R]

U.K. market averages advanced led by commodity stocks on the speculation that the OPEC will lower production and support higher prices for petroleum products. Iran and Venezuela are favoring lower output to sustain higher prices.

Market Sentiment

In London trading FTSE 100 rose 5.2% or 201.62 to 4,063.01.

Of the FTSE 100 index shares 79 rose, 21 declined, and 2 were unchanged. Autonomy Corp. led advancers in the index shares with a rise of 14.5%.

Oil Prices Rise

Oil prices rose to $70 per barrel today on a speculation that the OPEC members will curtail supply after its meeting on October 24. Venezuela and Iran are advocating lower production volumes to support higher prices. The OPEC member countries have lost an estimated $1 billion a day since the price peaked in July.

Separately, the Daily Mail reported today that Prime Minister has ordered oil companies and garages to cut prices in tandem with falling prices on the international market.

Brown demanded that garages follow BP, Asda and Morrisons that have cut the pump prices to below £1 a litre or face an inquiry. BP and Exxon Mobil have also lowered prices. The average price currently stands at £1.07 a litre but some garages are charging up to £1.20.

According to the newspaper accounts, energy minister Ed Miliband said yesterday that U.K. was “ready to legislate” if suppliers do not voluntarily cut prices.

Miliband said, “''Unfair pricing which hits the most vulnerable hardest is completely unacceptable. I made that clear to the representatives of the big six energy companies when I met them yesterday.”

Libor Falls to 4.42%

The British Bankers Association said the London Interbank Offered Rate, or Libor, for three-month loans in dollar declined by 8 basis points to 4.4%, while the overnight rate for dollars fell 27 basis points to 1.7%.

Gainers & Losers

Autonomy Corp. led advancers in the FTSE 100 index shares with a rise of 14.5% followed by increases in Anglo America of 12.3%, in Alliance Trust of 11.1%, in BHP Billiton of 10.4%, and Thomas Cook of 10.2%.

Commodity stocks soared after oil prices rose above $72 per barrel, rebounding from yesterday’s decline. Rio Tinto advanced 9.8% and BP edged up 8.6%.

Aviva Plc led decliners in the FTSE 100 index shares with a fall of 12.7% followed by losses in Prudential of 9.3%, in Fresnillo of 8.1%, in Whitbread of 7.7%, and Hammerson of 7.1%.