Edinburgh - Britain's top share index edged higher on Tuesday, boosted by strength in oil and gas companies as new discoveries and good results cushioned the blow of a fall in the price of Brent crude.
Energy shares added 8.6 points to the FTSE 100, the biggest sectoral contributor, with Tullow Oil - up 2 percent - the top riser after it said its partner in northern Kenya, Africa Oil, had found oil and gas at the Ngamia-2 well.
British oil and gas services group Petrofac also lent support to the sector, up 1 percent after it said its order backlog stood at a record $20.1 billion at the end of May.
“Oil stocks are doing particularly well today, and we like Tullow Oil - there's decent upside to that piece of news,” Manoj Ladwa, head of trading at TJM Partners, said.
“Petrofac won't see the benefit of those orders until a little further down the line, and the focus will be on exploration companies such as Tullow.”
The positive newsflow supported the sector even as the price of Brent crude slipped below $114, after data from Iraq eased concerns that the conflict there would affect supply.
Concerns that exports may have been affected sent the price above $115 on Monday, knocking back airlines, for which oil is a major input cost.
The sector rebounded on Tuesday, in line with the lower oil price, with International Consolidated Airline Group up 1.6 percent and easyJet up 1 percent.
“If we see a surge from here in oil we do expect to see equity weakness but at the moment we see price stabilisation,” Atif Latif, director of trading at Guardian Stockbrokers, said.
“Much of the oil play at the moment is led by uncertainty in the Middle East, but we see limited contagion effects from the current Iraqi/Libya oilfields that are affected.”
The FTSE 100 was up 5.06 points, or 0.1 percent, at 6,805.62 by 09:45 SA time, failing to retrace the previous session's 0.4 percent fall, which was the first drop for a week.
The index remains roughly 2 percent off its December 1999 record high of 6,950.60 points.
Every sector was in positive territory, with pharmaceuticals continuing to receive support from takeover news after Shire became the latest British drugmaker to be the subject of a US bid.
UBS and Barclays both raised their target price on the stock, up 1.2 percent, with the Swiss investment bank adding a 30 percent M&A premium to its price.
But UBS also cautioned that while uplift from a new bid from AbbVie could help the share price, the stock already looked expensively valued. - Reuters