Reuters: Hot Stocks: BP fuels rally in British shares, blue-chips hit 5-mth high

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BP fuels rally in British shares, blue-chips hit 5-mth high Oct 29th 2013, 16:04 Share this Email Print Reprints Tue Oct 29, 2013 12:04pm EDT * FTSE 100 rise 0.6 pct to 5-month high * BP surges after reporting strong results * Lloyds falls on PPI related charges By Atul Prakash LONDON, Oct 29 (Reuters) - Britain's top share index climbed to a five-month high on Tuesday, with investors flocking to buy energy stocks after strong results from BP raised expectations for other oil firms to post good earnings. Shares in BP surged 5.3 percent to sit at the top of the FTSE 100's gainers list, after reporting forecast-beating profits, announcing a dividend hike and revealing plans to sell assets. Some investors bet on encouraging results from other major energy firms this week, including Royal Dutch Shell, Total and Statoil, in line with BP earnings. "We are overweight on the energy sector as we believe that the companies have got more potential to surprise on the upside at this point in the cycle, given low market expectations," Robert Parkes, equity strategist, HSBC Securities, said. "Earnings momentum for the sector has been better than the wider market, oil prices have stabilised, concerns of a hard landing in China have been fading and the sector is exposed to the slowly improving global economy." The UK oil and gas index, the best sectoral performer, recorded its best daily gain in nearly one year. The index rose 2.2 percent to a three-month high, helping the FTSE 100 to gain 40.09 points, or 0.6 percent, to 6,765.91 by 1552 GMT after rising up to 6,773.77, the highest since May. Of the total FTSE gains, BP alone added 17.5 points. "BP results show that the confidence in the company is back after a massive oil leak disaster some years ago," said Tom Robertson, senior trader at Accendo Markets. "However, I am cautiously optimistic on the stock market as its near-term direction could be dictated by earnings results." A third of the way through the reporting season, 53 percent of companies have either met or beaten expectations, roughly in line with the previous three quarters, but 67 percent have missed revenue expectations, according to StarMine data. "Investors are still concerned about revenue growth, but of more concern right now is the outlook and whether companies see things improving in 2014," Craig Erlam, analyst at Alpari said. The energy sector's strong performance was clouded by some weaker companies, with Lloyds falling nearly 2 percent after announcing a further 750 million pound charge in the third quarter for the mis-selling of payment protection insurance. Investors' will keep a close eye on the Federal Reserve's two-day meeting from Tuesday for hints about when the U.S. central bank could start trimming its massive stimulus programme, which have helped stocks to set multi-year highs. Markets expect the Fed to extend its $85 billion monthly bond buying scheme into next year while it assesses the impact of this month's government shutdown on growth. (Editing by Angus MacSwan) Link this Share this Digg this Email Reprints

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