January 31, 2011 / 9:16 AM / 10 years ago

Egypt unrest frays FTSE's nerves; oils calm

LONDON (Reuters) - Worries over the impact of the political unrest in Egypt saw the top share index fall on Monday, but losses were limited by gains from heavyweight energy issues as the crude price firmed.

The London Stock Exchange building is seen in central London September 24, 2009. REUTERS/Stephen Hird

At the close, the FTSE 100 .FTSE index was 18.43 points, or 0.3 percent lower, at 5,862.94, having shed 1.4 percent on Friday when worries over the situation in Egypt intensified.

Protesters further stepped up their campaign on Monday to force Egypt’s President Hosni Mubarak to quit as world leaders struggled to find a solution to a crisis that has set a fire under the Middle East’s political map.

Travel firms were big fallers, with traders citing worries over the disruption caused by the protests in Egypt and the impact of a strong crude price.

Tour operator TUI Travel TT.L shed 2.6 percent, with mid cap peer Thomas Cook TCG.L down 3.1 percent, and International Consolidated Airlines Group (ICAG.L) losing 1.8 percent.

Risk-sensitive banks were a drag on the blue chips as investors remained nervous about the global picture, with RBS <RBS.L the worst off, down 2.4 percent.

But gains by energy issues limited the FTSE 100’s losses, as crude held around $90 a barrel on fears the unrest could spread across a region that produces over a third of the world’s oil.

“Despite the worry over Egypt the sell off was not as much as it could have been and the FTSE did well to recover from its lows,” said Angus Campbell, head of sales at Capital Spreads.

“The uptrend for equity markets remains intact and if we see a swift solution to the problems then we could easily look back on the recent retracement as yet another buying opportunity.”

BG BOOST

BG Group BG.L was the top blue chip gainer, adding 5 percent, rallying after sharp falls on Friday as it said it has suspended drilling in Egypt but gas production remained normal.

Traders highlighted the greater impact of BG’s recent new oil discovery in the Santos Basin, offshore Brazil.

“BG Group remains a dark horse among leading FTSE 100 oil & gas explorers even though the ongoing exploration developments in the massive Santos Basin should be uppermost on trader’s radar,” said Andrew Gibson, head of research at Galvan.

But BP (BP.L) bucked the firmer oil sector trend, shedding 0.4 percent, ahead of its fourth-quarter results due on Tuesday.

There were concerns over BP’s dividend, as Russian shareholders in its TNK joint venture convened to consider withholding the $1.8 billion payment.

Miners rallied led by Xstrata XTA.L, up 2.2 percent, excited by merger activity among U.S. coal miners.

Massey Energy MSEE.N agreed to a $7 billion takeover offer from Alpha Natural Resources ANR.N.

U.S. blue chips .DJI were 0.2 percent higher by London's close as merger activity, and solid earnings from Exxon Mobil (XOM.N), helped offset concerns about the unrest in Egypt.

Among individual gainers in London, Rexam REX.L added 2.1 percent after the can maker signed a contract in North America and a long-term deal with its largest customer in Brazil.

Editing by Jon Loades-Carter

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