Energy companies lead Britain’s FTSE rebound
LONDON, March 26 — Heavyweight energy stocks helped Britain's top share index rebound on Monday, pushing up from a technical support level and opening the door for a re-test of eight-month peaks if upbeat economic news from Germany is matched by future data.
Oil and gas majors accounted for nearly half of the FTSE 100's gains as investors cheered new discoveries in the sector and sought to protect their portfolios from the higher price of crude, which has risen 17 per cent since the start of the year.
BG Group was a strong performer, up 1.6 per cent, as the firm unveiled its fourth Tanzanian gas discovery from the Jodari-1 exploration well.
Tullow Oil added 3 per cent after finding oil in an exploration well in Kenya.
"The focus at the moment is on any explorer, any energy stock, that's where any interest is," Steve Larkins, head of sales trading at Seymour Pierce, said.
London's benchmark index was up 27.02 points, or 0.4 per cent, at 5,881.91 by 1152 GMT, bouncing from the 50-day moving average around 5,856.29 points and recovering poise after its worst week in three months. Before last week's fall, the FTSE, which is still up 5.5 per cent since the start of 2012, had climbed as high as 5,989.07, a level last seen in July.
"We are grinding forward but we've lost a bit of momentum and we need something concrete to push us back towards the high," Jack Pollard, analyst at Sucden Financial, said.
"There is some resistance around 5,964 which is the recent range high where we had the consolidation period in mid-February ... but if it pushed through that, it could re-test the highs we saw early last year."
One possible catalyst for such a move could be strong economic data following the surprise improvement in German business sentiment this month, as signalled by the IFO index on Monday, which reassured investors after some gloomy data the previous week.
"Sentiment is too negative in this region," ING said in a note, recommending exposure to companies which make money in Northern and Eastern Europe, and highlighting oil services, insurance, chemicals and telecoms as most likely to benefit quickly from an economic rebound.
Chemicals were one of the strong performers in Britain on Monday, up 1.3 per cent.
On a stock level, Aberdeen Asset Management was the top blue-chip gainer, up 4 per cent at 260 pence, after reporting that clients added 1.4 billion pounds (RM6.8 billion)of new money to its range of funds in the first two months of the year, as investors recovered their appetite for risk and returned to buying equity products.
"We put our estimates under review, upgrade our target price to 270 pence (RM1.315) and reiterate 'buy'. Aberdeen remains our preferred stock in the asset manager space," Investec said in a note. — Reuters