FTSE 100 index up 0.5%; Morrison downgraded at Goldman Sachs
LONDON (MarketWatch) - London's top share index pulled back from early losses to trade higher on Thursday, as oil giants and Rio Tinto advanced.
The U.K. FTSE 100 index (UK:UKX: news, chart, profile) rose 0.5%, or 22.68 points, to 4,389.96.
Other European shares declined while U.S. stock fell in early trading after some dismal jobless claims data. See Europe Markets. See Indications.
Oil producers climbed in London, with BP up 4.2% and Royal Dutch Shell up 2.5%, after oil futures moved up $3.21 to $46.73 a barrel in electronic trading.
Tullow Oil (UK:TLW: news, chart, profile) shot up 18.8%. The firm said that it is likely to see material upgrades of current resource estimates following successful drilling in Ghana and Uganda.
Competitor Cairn Energy (UK:CNE: news, chart, profile) climbed 10.8%.
Rio Tinto jumped another 4.8%, building on steep gains made Wednesday when it announced measures to cut costs and capital expenditure.
Deutsche Bank upgraded the mineral extractor to buy from hold on Thursday, a move it said reflects lower balance-sheet risk at the firm.
Still, pharmaceuticals were under pressure in the top London index, with GlaxoSmithKline down 0.9% and AstraZenecadown 1%.
Insurers also helped keep gains in check, with Friends Provident (UK:FP: news, chart, profile) down 8.2% and Standard Life down 3.5%.
Worries that the U.K. will be especially hard hit by the global economic downturn meant that the British pound notched another record low against the European single currency on Thursday. See full story.
Retailers in focus
Over the past year, retailers have felt the full force of worries about the economy and many traded lower again on Thursday.
Shares of William Morrison (UK:MRW: news, chart, profile) fell 2.4% after Goldman Sachs cut its rating on the supermarket group to sell from neutral, citing the stock's 26% premium to the sector.
Goldman said it expects Morrison to report fairly robust sales in its January trading update, but that the figures will be largely in line with those of rivals since they will compare with a strong year-earlier fourth quarter.
"We believe that the market has assigned a fairly high valuation for Morrison's operations, which we believe will contract going forward," the broker said.
Tesco (UK:TSCO: news, chart, profile) shares fell 1.3% after reports that it's going to start offering heavy discounts on some of its products from Friday until Christmas.
Retail-sector analysts at J.P. Morgan noted that the downturn in consumption in 2008 has been much more widespread than initially expected.
"We expect news flow over Christmas and through the first quarter to be with a significant number of smaller retailers in financial difficulties," the broker added.
One of those retailers in difficulties, Woolworths, is holding a closing down sale on Thursday, according to reports, after the administrators of the group failed to find a buyer.
Meanwhile, music and books retailer HMV Group (UK:HMV: news, chart, profile) fell 2.9% outside the top index after it swung to a loss of 19.8 million pounds in the 26 weeks to Oct. 25. A year earlier, the firm posted a profit of 25.9 million pounds.
Since the end of the firm's fiscal half-year, markets have weakened in line with general consumer confidence and the book market has deteriorated in the five weeks to Nov. 29, the firm said.
Mulberry Group (UK:MUL: news, chart, profile) shares fell 6.9% after the luxury-goods firm, famous for its handbags, said U.K. retail sales fell 1% in the 10 weeks to Dec. 6, while comparable sales fell 12%.
"Since September, the global economic outlook has become significantly more difficult," the firm said. First-half profit climbed to 893 million pounds from 815 million pounds.
Away from retailers but staying outside the top index, shares in New Star Asset Management (UK:NSAM: news, chart, profile) shot up 66.7%.
Blue Planet Investment Management bought a 6.7% stake in the firm late Wednesday.
