London equities fell on Tuesday, but well-received numbers from FTSE 100 energy heavyweights BP and BG Group helped ensure overall losses were not too severe.
The benchmark index fell 0.4 per cent to 5,525.54 by the close as traders nervously watched the latest twists and turns of EU leaders’ talks on addressing the eurozone debt crisis.
But the energy companies kept hold of the top of the leaderboard even as the session took a turn lower.
BP was the best single performer at the end of the session – up 4.4 per cent at 457.2p – after it pledged to increase pay-outs to shareholders and raised its target for disposals by $15bn to $45bn.
The company said it had reached a “definite turning point” after the Macondo oil spill last year in the Gulf of Mexico. It also reported third quarter replacement cost profit somewhat ahead of forecasts at $5.14bn.
“BP’s Bob Dudley [chief executive], in his accompanying statement to the third-quarter results indicated that it is time for BP to start looking forward post-Macondo,” said Keith Morris, oil sector analyst at Evolution Securities.
“This renewed confidence is premised on the completion (almost) of a major maintenance programme across the group’s entire asset base …BP expects cash flow from operations to grow by 50 per cent by 2014. This confidence should see dividend distribution reviewed in February and in the long term.”
BG Group claimed third place on the leader board – up 3.8 per cent to £13.79 – after strong demand for liquefied natural gas (LNG) helped it beat forecasts. Its third-quarter earnings came in at $1.02bn, higher than the $971m predicted. Operating profit from its LNG business was $620m, above the $570m predicted at the upper end of the range forecast.
Stuart Joyner, analyst at Investec, drew attention to potential divestments at the company, saying: “We continue to believe that BG will demerge or sell part of its Brazil business which could release up to 625p per share.”
But as the negotiations dragged on, the best mining stock on the index had defensive characteristics. Bullion miner Randgold Resources was 4.3 per cent higher – claiming the second spot on the FTSE – at $67.07.
Interdealer broker Icap lost 3.8 per cent to 410.6p after UBS cut its rating on the stock from “neutral” to “sell”, as well as cutting its price target from 475p to 380p.
Arnaud Giblat, analyst, issued a note to UBS’s clients saying the cut came due to: “[A] significant pick-up in structural pressures on investment banks – which we believe will ultimately squeeze interdealer broker’s revenues; increasing cyclical headwinds, notably in interest-rate-related activity; the misconception that interdealers will benefit from volatility; and the delay in structural changes benefiting Icap.”
Get alerts on UK equities when a new story is published