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BP pushes FTSE up on spill payout
LONDON (Reuters) - BP, boosted by a contribution to the cost of last year's Gulf of Mexico oil spill, and bullish analyst comment helped drive Britain's FTSE 100 index higher on Friday, but concerns over weak buying momentum capped gains.
BP (BP.L) was up 3.7 percent, adding around 13 points to London's blue-chip index, after it said MOEX, a unit of Japanese trading house Mitsui & Co (8031.T) and partner in BP's doomed Macondo well, had agreed to pay the UK oil major $1.1 billion toward the cost of the spill.
"This allows BP's risk reward to trade on the upside, with downside risk limited. This adds some certainty, and bearing in mind that sum-of-the-parts is above 600 pence, we will see buyers on this news," said Atif Latif, director of trading at Guardian Stockbrokers.
The rise was underpinned by upbeat broker comment from Investec, which upgraded BP to "buy," while RBC Capital Markets started coverage of the stock with an "outperform" rating.
Investec's Stuart Joyner called for a "radical, full demerger of BP" to close the acute discount on Investec's view of fair value.
He suggested that BP could be of interest to rival oil firms at its current discount: "We think the Russians, Chinese or Indians will look hard at the sub-6 times multiple."
Sector peer BG Group (BG.L) rose 0.8 percent.
London's blue-chip index .FTSE had risen 28.68 points, or 0.5 percent, to 5,984.67 by 1047 GMT, falling from an earlier 6,017.56.
The FTSE has rallied around 2 percent since attacking mid-April lows of around 5,860 on Tuesday, but remained within the 250-point range stretching back to the beginning of April.
The relative strength index (RSI) shows the FTSE is comfortably priced around the 50 percent level, where 70 indicates overbought territory.
"The RSI remains supported by a rising trend line calling for a further rise. However, quotes are approaching from a resistance area around 6,024. The immediate trend is up, but the momentum is weak," Nicolas Suiffet, analyst at Trading Central, said.
Miners .FTNMX1770 supported the rally as investors tucked into riskier assets following recent dips.
Randgold Resources (RRS.L) rose 1.1 percent as Citigroup raised its target price on the precious metals miner and talked up the price of gold, lifting its 2011 forecast to $1,443 an ounce.
Meanwhile, Associated British Foods (ABF.L) climbed 2.9 percent as Exane BNP Paribas raised its rating to "outperform."
Among financials, Prudential (PRU.L) led insurers higher, up 1.3 percent as UBS raised its target price on the firm.
Banks .FTNMX8350 were mixed, with Standard Chartered (STAN.L) 1.7 percent higher as UBS upgraded the Asia-focused bank to "buy," but Lloyds Banking Group (LLOY.L) shed 1.4 percent as Goldman Sachs downgraded its rating to "neutral."
Engine maker Rolls Royce (RRS.L) fell 0.9 percent as a Qantas Airways (QAN.AX) flight returned to Bangkok after pilots were forced to shut down one of the aircraft's engines.
Retailer Next (NXT.L) shed 1.2 percent, with traders citing a read-across from U.S. peer Gap Inc (GPS.N), which slashed its full-year profit outlook.
Imperial Tobacco (IMT.L) was down 1.8 percent on reports that Altadis, a unit of the British group, plans to cut the price of its blonde tobacco brands by 15 euro cents to compete with a price cut by rival Phillip Morris.
Amec (AMEC.L) lost 1.2 percent as Collins Stewart cut its rating to "hold," preferring Petrofac (PFC.L) and Wood Group (WG.L), up 2.4 and 1 percent, respectively.
No major economic data is due for release in the UK or the United States on Friday, where Wall Street futures are pointing to a flat market open.
(Editing by Will Waterman)
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