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FTSE close: Libya pushes oil up, BA suffers

By Ed Monk for Thisismoney.co.uk
Updated: 12:24 EDT, 22 February 2011

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17.20 (close)

Traders at BGC react to the falling market

Bad day: The violence in the Middle East has hit markets.

Libya's ongoing crisis sent the London market into the red today as oil prices continued to surge.

But the FTSE 100 Index fought back from the worst of its earlier declines, closing down 18 points at 5996.8 as fears over a civil war in the North African country played on investors' minds.

The Dow Jones Industrial Average was down 0.9% and the Nasdaq Composite Index fell more than 1.7% as Wall Street reopened after yesterday's public holiday and as US investors caught up on events in North Africa European markets were also hit by a poor session in Asia amid the Libyan turmoil and on rating agency Moody's decision to downgrade the outlook on Japan's credit rating for the first time in nearly nine years.

Oil prices remained near two-and-a-half-year highs as fears continued to mount over world oil supplies on concerns that Libya's crude exports of 1 million barrels a day could be affected as foreign oil companies evacuate staff from the country.

Brent crude for April delivery hit more than 108 US dollars a barrel at one stage.

The rising oil price gave support to the US dollar which was up at 1.61 against the pound. Sterling was also down to 1.18 euros following speculation that the ECB would raise interest rates sooner than previously anticipated.

Better-than-expected UK borrowing figures offered limited support to stocks, despite a £3.7bn surplus for Britain's public finances in January thanks to a bumper tax haul.

Airline and travel stocks were particularly hard hit on fuel cost worries, with the merged British Airways and Iberia group International Consolidated Airlines down 1.3p to 238.2p.

Tour operators were also under pressure, with Thomson parent TUI Travel down 2.5p to 243.3p and second tier counterpart Thomas Cook falling 3.6p to 194.4p.

Oil giant BP benefited from surging oil prices and confirmation of its second deal in as many days as it revealed plans to sell several assets in the UK. Shares edged ahead 1.2p to 492.8p.

Property firms lost earlier gains sparked by Hammerson's news yesterday of an 11% rise in underlying 2010 profits to £144.5m. Brent Cross owner Hammerson dipped 3.9p at 451.3p, while Land Securities lost 0.5p to 735p.

Engineering firm BAE Systems was the top Footsie faller after a report published by the House of Commons Committee of Public Accounts suggested defence equipment projects are over-spending, leading to speculation that the Government may need to renegotiate contracts. Shares in BAE were down 4% or 14.7p to 326.8p.

Outside the top flight, Ocado's shares dropped 6% after upmarket grocer and online rival Waitrose's announcement it will relaunch its home delivery business with a £10m investment.

The biggest Footsie risers were Royal Bank of Scotland up 1.1p at 47.7p, Schroders ahead 25p at 1384p, BHP Billiton up 38.5p at 2413p, and African Barrick Gold ahead 8.5p at 575.5p.

The biggest Footsie fallers were BAE Systems down 14.7p at 326.8p, International Power off 10.2p at 331.7p, Bunzl down 10.2p at 331.7p, and Randgold Resources off 120p at 5115p.

16.10: The FTSE 100 has seen a late surge, and moved 11.7 points higher to 6,026.5 as the end of the session approaches.

In the US, the Dow is down 64.3 points at 12,326.9 after better than expected consumer confidence data.

14.55:

The Dow Jones plunged 100 points-plus into the red after the opening bell, but it has since recovered some ground to trade 87.3 points lower at 12,303.9.

The FTSE 100 is 35.8 points down at 5,979.

The picture is also gloomy on leading European bourses. Some 1.4% has been wiped off Germany's DAX, which is 105 points off at 7321.8. And France's CAC 40 has shed 49.5 points to trade at 4048.

14.05:

US markets look set for a fairly sizeable mark-down when they reopen following a three-day break.

Futures trading indicates that investors across the Atlantic are returning to work in a risk-averse mood following the violence in Libya and unrest in other oil-producing countries.

The FTSE 100 is down 32.2 points at 5,982.64.

12.50:

At lunchtime, the Footsie has clawed back some of the ground lost this morning but is still 52.7 points lower at 5962.1.

The oil price rises (see previous updates) have hit airlines and travel firms.

The merged British Airways and Iberia group International Consolidated Airlines is down 4%, or 9p, to 230.6p.

Budget rival easyJet fell 12.7p to 364.3p in the FTSE 250 Index.

Tour operators are also under pressure, with Thomson parent TUI Travel down 5.6p to 240.3p and second tier counterpart Thomas Cook falling 7.2p to 190.9p.

The only economy news of note today is the January UK public borrowing figure. And it's good news - a 12% jump in tax reciepts helped the Treasury post its first monthly surplus since 2008.

It gives the Government a better-than-fighting chance of hitting borrowing targets for this year. There's more on that here.

11.20:

Looking beyond the FTSE, airports operator BAA has hailed 'robust' results for 2010.

It managed to reduce its pre-tax loss despite the severe disruption suffered by passengers during snow, strikes and the volcanic ash cloud. We have more here.

The FTSE 100 is trading 63.5 points lower at 5,951.3.

10.40:

The Footsie has settled 71.86 points off this morning, back below 6,000 at 5942.94.

London has followed global indicies lower as ionvestors flee shares in favour 'safe haven' commodities. That has pushed oil higer.

We've got more detailed explanation of the impact of Libya on the markets here.

09.20:

The FTSE 100 suffered heavy falls as the violence in Libya raised the oil price, with fuel-thirsty British Airways hammered and miners lower.

The Footsie sunk another 1.3% into the red today following hefty falls in Asia as the Libyan crisis battered investor confidence.

Hong Kong's Hang Seng Index tumbled 2% overnight, hit also by Moody's decision to downgrade Japan's credit rating for the first time in nearly nine years.

European shares followed suit, with the FTSE 100 Index down 75.3 points to 5939.5.

Fears also continued to mount over world oil supplies on concerns that Libya's crude exports of 1 million barrels a day could be affected as foreign oil companies evacuate staff from the country.

Brent crude for April delivery gained 1.21 dollars to 106.95 a barrel on the ICE Futures exchange in London.

The fuel price worries sent airline stocks lower, with British Airways group International Consolidated Airlines down 2% or 5p to 234.6p.

Budget rival easyJet fell 11.7p to 365.3p in the FTSE 250.

Miners were among those hit the most in the sell-off, led by Lonmin and Xstrata down 41.5p to 1799.5p and 34p to 1377p respectively.

Elsewhere, car dealership group Pendragon rose 2%, ahead 0.4p to 23.9p, after more than doubling annual underlying profits in 2010 to £25.2m.

In currency, the pound lost against the dollar as the greenback revelled in its status as a safe haven for spooked investors. At 9am sterling was at $1.6145 compared to $1.6229 at the previous close. Against the euro the pound was €1.1905 compared to €1.1872 at the previous close.

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