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Oil companies give FTSE some ballast as miners sink
June 12, 2014 / 2:55 PM / in 3 years

Oil companies give FTSE some ballast as miners sink

* FTSE 100 up 0.1 percent

* Oil majors rise with oil price on Iraq supply fears

* ITV up on report of Omnicom windfall

* Miners under pressure on China demand concerns

By Francesco Canepa

LONDON, June 12 (Reuters) - Energy companies kept Britain’s top share index out of the red on Thursday, as oil prices were lifted by violence in Iraq.

But the FTSE struggled to make any real headway as heavyweight mining stocks dropped sharply after worry about declining Chinese demand sent copper prices to a one-month low.

By 1429 GMT the FTSE 100 was up 7.89 points, or 0.1 percent, at 6,846.76 points at 1413 GMT.

Energy stocks added 9.16 points to the index - the bulk of its advance - as Brent crude oil climbed towards $112 a barrel on worries that supply from Iraq, a major OPEC exporter, would be disrupted. Sunni rebels from an al Qaeda splinter group overran the Iraqi city of Tikrit on Wednesday and closed in on the biggest oil refinery in the country.

“If oil prices go up... It directly flows to revenues and to the bottom line,” Oswald Clint, an analyst at Sanford Bernstein, said.

BG, which does not have a presence in Iraq, rose 1.8 percent, while BP and Royal Dutch Shell, which are present in the country, added 0.8 percent and 0.5 percent, respectively.

Companies dealing in basic materials, however, knocked 10.5 points off the FTSE. Miners Rio Tinto and Anglo American were each down 3.1 percent.

The biggest blue-chip gainer was ITV, up 2.3 percent after a Brandrepublic report suggested that advertising group Omnicom would redirect 30 million pounds ($50.37 million) worth of ad spending to the British broadcaster from rival Channel 5.

“An extra 30 million pounds in an operationally geared business like ITV could see a high flow-through of that into profits, so that’s certainly good news for ITV,” Paul Richards, an analyst at Numis Securities, said.

Trade in ITV’s shares was busy, with volume equalling its full-day average, while across the FTSE 100 was quieter, with volume some 40 percent of its own average.

The index has traded in a tight 130-point range since the beginning of May, while other European indexes have pushed up to new multi-year highs, buoyed by stimulus from the European Central Bank.

The FTSE 100 is down 0.3 percent this week - the third time it has failed to break out of the range in the last six weeks.

“The UK FTSE remains locked in a tight ... range, with catalysts lacking for a break either way,” Mike van Dulken, head of research at Accendo Markets, said in a note. ($1 = 0.5956 British pounds) (Additional reporting by Alistair Smout; Editing by Sophie Walker)

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