FTSE 100 index up 0.9%; J. Sainsbury and William Morrison move higher
LONDON (MarketWatch) - Oil majors led an advance for British shares on Thursday, a day when the Bank of England will reveal its latest decision on interest rates.
UK:BP 525.00, +7.00, +1.35%
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In the oil sector, shares of Royal Dutch Shell (RDS .A 55.20, -1.48, -2.65%) (UK:RDSA 1,684, +23.00, +1.38%) advanced 1.4% and BP (BP 50.75, -1.57, -3.00%) (UK:BP. 525.00, +7.00, +1.35%) shares climbed 1.5%.
Exane BNP Paribas upgraded BP to outperform from neutral.
With oil at $67 a barrel compared with the broker's 2009 forecast of $45.50 a barrel, Exane BNP Paribas said it decided to add leverage to its defensive portfolio.
"A compelling, safe dividend yield, attractive 14% upside to the target price, healthy near-term volume growth and cost reductions make this the right entry point," the broker said.
Oil futures were up 59 cents at $66.71 a barrel in electronic trading on Thursday. Read more on oil.
Oil futures have risen amid hopes that the economic backdrop has stabilized. Improved sentiment on the economy has been helped by central-bank actions, and the Bank of England is widely expected to leave interest rates on hold at a historic low 0.5% on Thursday. See full story.
Overall, the U.K. FTSE 100 index (UK:UKX 4,396, +12.83, +0.29%) climbed 0.9%, or 40.63 points, to 4,424.05. It's the first time the index has gained ground in three sessions.
Other main European equity markets were also higher, while U.S. stock futures were pointing to a bright start in the U.S. See Europe Markets.
Banks offering support to the top British share index included Lloyds Banking Group, (UK:LLOY 67.40, +1.70, +2.58%) (LYG 5.52, -0.34, -5.80%) up 4.6%. Barclays (UK:BARC 265.75, +8.25, +3.18%) (BCS 16.98, -1.33, -7.26%) shares halted two sessions of sharp losses to trade up 4%.
Moving across to food retailers, shares of J Sainsbury (UK:SBRY 322.50, +7.50, +2.37%) advanced 2.5% after it was upgraded to overweight from equal-weight at Morgan Stanley.
The broker said the supermarket chain will deliver premium comparable-sales growth for at least the next 12 months, driven by improved consumer-price perception.
Should Sainsbury be able to close the around 15% sales density gap with rivals like Tesco (UK:TSCO 360.00, +7.80, +2.21%) and the Asda unit of Wal-Mart Stores, (WMT 50.88, +0.95, +1.90%) its earnings per share could rise to more than 50 pence by fiscal 2012-2013, the broker said.
Tesco shares were up 2.3%.
Shares of British supermarket chain William Morrison (UK:MRW 251.00, +4.00, +1.62%) climbed 2.6%. It said that comparable sales rose 7.3% excluding fuel and 3.5% including fuel in the 13 weeks to May 3.
Outside the top index, shares of department-store-chain operator Debenhams (UK:DEB 88.50, -3.75, -4.07%) declined 3.8%.
It will issue shares to raise 323 million pounds ($526.3 million) and proceeds will be used to reduce net debt, amend debt covenants, increase flexibility to buy back debt and improve its ability to pursue acquisitions.
Separately, the firm said that comparable sales for the 12 weeks to May 28 slipped 0.8%.
Shares of U.K. low-cost airline easyJet (UK:EZJ 308.50, -5.25, -1.67%) lost 0.9%, also outside the top index.
The number of passengers it carried in May rose 1.8% to 3.95 million from 3.89 million a year earlier. Load factor, or a measure of passengers against available seats, improved to 83.5% from 83.2%
