FTSE recoups losses as oil price supports energy
LONDON (Reuters) - Shares rebounded from early falls for the second session in a row on Wednesday, with a rising oil price supporting energy stocks to lead British blue chips higher.
The FTSE 100 index gained 3.93 points, or 0.1 percent, to finish at 5,752.03 points in thin trade of only 85 percent of the average 90 day volume.
Energy stocks added 5 points to the index, supported by a spike in the oil price, which gained more than $1 after a bomb blast in Tel Aviv threatened to derail hopes for a truce between Israel and Palestine and raised the prospect of a wider regional conflict.
"We have seen in the last couple of hours people coming in for the energy names, albeit in low volumes," Steve Asfour, head of sales trading at Fox Davies Capital, said.
"It's probably a read-across from the oil price spike and there's some really depressed oil and gas stocks really coming back into play."
One such stock was BG, which led FTSE 100 gainers, rising 2.8 percent. The gas company had shed over a quarter of its value in less than a month after forecasting no growth in 2013 in a trading update.
Utilities also supported the rise, led by a 1.9 percent rise in United Utilities after a clarification by sector regulators struck a more conciliatory tone.
"The softening of Ofwat's stance on a Competition Commission referral reduces the near-term risk of negative newsflow and highlights how important a consensus driven outcome is to this process," JPMorgan said in a note.
Johnson Matthey lost 5.8 percent in heavy volume of over three times its average 90 day volume. The precious metals and commodity company fell after cautioning over an outlook dented by weakness in both the United States and Europe.
Basic materials also suffered, with miners losing 0.5 percent as growth worries hit commodity prices.
The copper price fell 1.3 percent as the Federal Reserve chairman cautioned over the prospect of growth in the United States given tricky fiscal negotiations, and Greece's international lenders failed to agree on an aid package for the country.
European finance ministers are to meet again about Greece on Monday. Price moves and volumes were capped, with the U.S. Thanksgiving holiday beginning tomorrow meaning that progress on both fronts is likely to be delayed until next week at the earliest.
"It appears from the price action we've seen early on that we're stuck in a tight range, probably until Monday," said Clive Lambert, technical analyst at FuturesTechs.
"From a technical point of view, we had a very strong session on Monday, following on from a rejection of the downside on Friday. But the price action of yesterday and today is quite uninspiring, and it doesn't look like we're going to head back up towards 5,900."
UK stocks dropped 3 percent last week but their losses were mostly reversed on Monday in the joint biggest single session rise of the year.
(Editing by Stephen Nisbet)
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