RTRS:Stocks tick higher, helped by firming oil prices
(Reuters) - Top share index ticked higher on Tuesday as strength in energy stocks due to firmer oil prices countered weakness in banks and miners on concerns about global economic growth.
At 1129 GMT, the FTSE 100 index was up 4.62 points, or 0.1 percent at 5,843.46 points, albeit in low trading volume of 26 percent of the 90-day daily average.
The main support for the index came from energy stocks, which rose along with a 1 percent gain in Brent crude as oil producer Iran increased its rhetoric against Israel, heightening concerns about a potential conflict between the two countries.
Oil service firms also benefited from a firmer crude price. Petrofac added 1.2 percent, helped as well by an upbeat note on the sector from Canaccord Genuity.
"We remain positive on the Oil Services sector, despite a strong recent run, with absolute multiples attractive and relative multiples only at average levels," Canaccord said, naming Petrofac as one of its favoured names in the sector.
Pumps maker Weir Group, up 1.8 percent, also found support from the gains by oil service firms, which are among its major customers.
But the top FTSE gainer was spirits group Diageo, ahead 2.0 percent as traders welcomed news the firm is in talks to acquire a stake in India's United Spirits.
"The potential deal represents a sound strategic investment for Diageo. The Indian market represents a huge growth market and in particular for the spirit industry," said Atif Latif, director of trading at Guardian Stockbrokers.
Asia-focused lender Standard Chartered was the biggest blue chip faller, down 3.6 percent on stock overhang fears after a report that Singapore investor Temasek was considering selling its 18 percent stake in the bank.
Oriel Securities analyst Mike Trippit remained bullish on Standard Chartered shares: "Any potential share price weakness resulting from uncertainty over Temasek's shareholding is a buying opportunity, in our view."
QUARTER-END
The FTSE 100 has risen 4.7 percent so far in the third quarter, with just over three trading sessions left to go, after having been lifted by the prospects of central bank moves to stimulate a struggling global economy.
After a summer boost, the index has largely been range-bound since news earlier this month of plans by the European Central Bank's to buy bonds of struggling countries to bring down their borrowing costs and by the U.S. Federal Reserve to launch a third round of quantitative easing (QE).
"The rally effect of QE has diminished each time, and the concern that we have is that there seems to be no catalyst, given weak economic data, that will continue to push the market higher," Guardian Stockbroker's Latif said.
Recent poor economic pointers, including Monday's fall in Germany's Ifo index of business sentiment for a fifth month running, and a slowdown in top metals consumer China have served to remind investors about the risks for the global economy.
Worries over the impact of a slowdown in China on demand for metals weighed on the mining sector, which was down 0.9 percent, with Rio Tinto losing 1.5 percent.
