June 24, 2014 / 8:16 AM / 3 years ago

Britain's FTSE edges up, buoyed by oil stocks

* FTSE 100 up 0.1 pct
    * Tullow, Petrofac lead oil and gas stocks higher
    * Airlines recover as Brent crude price drops back
    * Shire benefits from target price upgrades

    By Alistair Smout
    EDINBURGH, June 24 (Reuters) - Britain's top share index
edged higher on Tuesday, boosted by strength in oil and gas
companies as new discoveries and good results cushioned the blow
of a fall in the price of Brent crude.
    Energy shares added 8.6 points to the FTSE 100, the
biggest sectoral contributor, with Tullow Oil - up 2
percent - the top riser after it said its partner in northern
Kenya, Africa Oil, had found oil and gas at the
Ngamia-2 well. 
    British oil and gas services group Petrofac also
lent support to the sector, up 1 percent after it said its order
backlog stood at a record $20.1 billion at the end of May.
 
    "Oil stocks are doing particularly well today, and we like
Tullow Oil - there's decent upside to that piece of news," Manoj
Ladwa, head of trading at TJM Partners, said.
    "Petrofac won't see the benefit of those orders until a
little further down the line, and the focus will be on
exploration companies such as Tullow." 
    The positive newsflow supported the sector even as the price
of Brent crude slipped below $114, after data from Iraq eased
concerns that the conflict there would affect supply.
    Concerns that exports may have been affected sent the price
above $115 on Monday, knocking back airlines, for which oil is a
major input cost. 
    The sector rebounded on Tuesday, in line with the lower oil
price, with International Consolidated Airline Group up
1.6 percent and easyJet up 1 percent.
    "If we see a surge from here in oil we do expect to see
equity weakness but at the moment we see price stabilisation,"
Atif Latif, director of trading at Guardian Stockbrokers, said. 
    "Much of the oil play at the moment is led by uncertainty in
the Middle East, but we see limited contagion effects from the
current Iraqi/Libya oilfields that are affected."
    The FTSE 100 was up 5.06 points, or 0.1 percent, at 6,805.62
by 0745 GMT, failing to retrace the previous session's 0.4
percent fall, which was the first drop for a week.
    The index remains roughly 2 percent off its December 1999
record high of 6,950.60 points.
    Every sector was in positive territory, with pharmaceuticals
continuing to receive support from takeover news after Shire
 became the latest British drugmaker to be the subject of
a U.S. bid.
    UBS and Barclays both raised their target price on the
stock, up 1.2 percent, with the Swiss investment bank adding a
30 percent M&A premium to its price.
    But UBS also cautioned that while uplift from a new bid from
AbbVie could help the share price, the stock already
looked expensively valued.
    

 (Reporting by Alistair Smout; editing by John Stonestreet)

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