Tullow Oil underperformed a flat London market on Tuesday amid doubts over the value of its flagship fields off the coast of Ghana.

News that US explorer Kosmos Energy had exercised an option to extend its acreage off Ghana sent Tullow shares 1.5 per cent lower at £15.08.

Kosmos had agreed to pay up to $410m for additional interests in the Jubilee and Tano prospects. This was at least 29 per cent below the valuation for the fields that has been priced into Tullow’s shares, according to Macquarie analysts.

In response, Macquarie cut its valuation by 102p. Setting a new £13.40 price target, the broker moved to an “underperform” rating.

“We acknowledge that exploration success is the main risk to this rating but …Tullow is trading above its risked exploration value and more compelling value can be found in Afren and Premier Oil,” it said.

Premier rose 1.3 per cent to 447¾p but Afren was down 0.6 per cent at 139¼p as the recent speculative run in oil explorers faded. That followed Dragon Oil saying it was no longer considering a bid for Cameroon-focused Bowleven, which slumped 24 per cent to 102p.

The wider market was calm for a 16th day, with the FTSE 100 ending higher by 0.2 per cent, or 12.36 points, to 5,927.91. The index was on track for a 4.5 per cent gain in February, which would be its biggest monthly gain since October.

Essar Energy rallied from a record low, up 5.4 per cent to 113½p, as vague theories did the rounds that its controlling shareholder, the Ruia family, might take the power company private. Weaker earnings than expected on Monday took Essar’s slump to 73 per cent since flotation less than two years ago.

Miners trended higher in tandem with copper and gold futures. Fresnillo rose 2.6 per cent to £19.06 and Antofagasta was 1.8 per cent higher at £13.64.

ITV took on 1.6 per cent to 80½p. Merrill Lynch kept an “underperform” rating on the broadcaster but raised its target price, partly to reflect “Apple’s potential interest in the ITV brand”.

Profit-taking after results provided the main catalyst among the fallers.

Engineer GKN weakened 4.4 per cent to 222¼p after mixed results and guarded comments on 2012. Whitbread was down 0.6 per cent to £17.09 after a trading update showed sales growth for its Premier Inn chain continuing to slow.

Aggregates maker CRH drifted 1.9 per cent to £13.42 on results that beat forecasts but provided no surprises, while AZ Electronic Materials dropped 7.3 per cent to 288¾p after cautioning that 2012 sales would be weighted towards the second half.

BAE Systems was down 2 per cent to 309¾p amid worries about deeper cuts to US defence spending.

“The budget atmosphere in Washington [is] the worst we’ve seen in years,” said Sanford Bernstein. “Near-term programme decisions could result in delays, higher long-term costs and more uncertainty, making it more difficult for companies to allocate resources and manage their overhead costs over time.”

Implant maker Smith & Nephew fell 1.2 per cent to 618p after a British Medical Journal study raised concerns about failing metal-on-metal hip replacements. The report, in conjunction with the BBC, said hundreds of thousands of patients might have been exposed to toxic metals since the implants were introduced in 1997.

Persimmon led the housebuilders higher, up 12.7 per cent to 706½p, after announcing a surprise cash return to shareholders worth 620p per share over the next decade.

A day ahead of results, Taylor Wimpey was up 6 per cent to 52½p as Merrill Lynch repeated “buy” advice. Barratt Developments was up 5.5 per cent to 149¼p and Bellway took on 3.5 per cent to 818½p.

But Persimmon’s news cooled speculation that the group may bid for Bovis Homes, up 0.5 per cent to 512½p.

Lower than expected impairments meant Provident Financial’s full-year results beat forecasts, sending the home credit agency higher by 6.2 per cent to £11.40. Investors also welcomed a new bank facility and guidance that deposit taking was ahead of plan.

Support services outsourcer Interserve slipped 4 per cent to 292p on worries that results due Wednesday would disappoint.

Among small caps, Craneware rose 31.2 per cent to 400p after the healthcare software maker accompanied results with news of a US partnership deal.

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