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FTSE 100 shares ends higher after crude rallies

Last updated: 17:16 26 Jan 2016 GMT, First published: 13:45 26 Jan 2016 GMT

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The FTSE 100 closed out Tuesday’s trading positively, up 34 points or 0.59% to 5,911, as oil prices rallied.

Brent crude got a 4% boost, rising to US$31.80 per barrel. And traders found a little more confidence.

Mining firms, meanwhile, were among the notable risers with Anglo American (LON:AAL) up 12%, and six more blue-chip miners also in the top ten gainers.

Tesco (LON:TSCO) was up about 3% despite getting wrapped over the knuckles on Tuesday for putting profits over the interests of its suppliers.

The Groceries Code Adjudicator ruled that the supermarket group knowingly delayed payments to suppliers to improve its own financial position in tough markets. The ombudsman's Christine Tacon said Tesco had adopted unreasonable practices and behaviours including lengthy and widespread payment delays.

Investors take heart as oil prices move back above US$30

London shares staged a recovery as oil prices bounced back to more than US$30 a barrel on Tuesday.

The price of a barrel of Brent crude revived from being more than 2% down to stand 0.5% off at US$30.3 while a barrel of US light crude was 0.7% down at about US$30.1.

Analysts blamed a supply glut and uncertainty over the Chinese economy, although some believe the price falls may be bottoming out.

Separately, a report showed that sustained low oil prices were forcing North American regional banks to cut credit lines to shale oil companies and make provisions, attracting short sellers.

Market commentators said caution was unsurprising, given another late sell-off in China overnight and the upcoming US Federal Reserve interest rate decision and statement on Wednesday.

Craig Erlam at foreign exchange trader OANDA said: "When we consider that the fundamental factors at play – increased Iraq output, the return of Iran to the market and another rout in China overnight – it would not be unreasonable to expect broad declines in oil today, given how this year has gone so far.

"Instead the dip has so far been bought which suggests to me that a move back towards US$36.50 may be on the cards for both Brent and WTI."

The FTSE 100 Index recovered to stand 9.65 points off at 5867 by lunchtime.

Investors were raising a glass to Marston's (LON:MARS) after the pub and brewing group served up a good Christmas and New Year. Shares rose 6.5p to 157.2p.

But EasyJet (LON:EZJ) flew 40p lower to 1591p as the budget airline reported lower revenue in the first quarter due partly to lower demand after the Paris terror attacks.

Dixons Carphone (LON:DC.) reported a record Black Friday and buoyant discounted sales after Christmas, lifting group like-for-like revenue in the 10 weeks to January 9 by 5%. The shares rose in early trading but fell back later, standing 11.7p adrift at 455.4p.

Elsewhere, Amerisur Resources (LON:AMER) ticked up 0.75p to 20.75p as the oil and gas producer and explorer focused on South America bought privately owned Platino Energy (Barbados) from COG Energy for US$7mln.

Union Jack Oil (LON:UJO) strengthened its partnership with Egdon Resources (LON:EOG) in the UK onshore industry by taking a stake in the Laughton prospect in the East Midlands. Shares rose 4.35% to 0.12p.

Sound Energy (LON:SOU) was 0.25p up at 16.62p after agreeing terms to take a 75% stake in the Sidi Moktar onshore licences in Morocco.

Metals Exploration (LON:MTL) dropped 0.12p to 3.88p as it agreed a new debt repayment timetable with the financiers of its Runruno gold mine in the Philippines.

Shares in Diamondcorp (LON:DC.) sparkled 0.5p, or 8%, to 6.75p as it said its ramp-up to full production from a block at its Lace mine in South Africa was on track to achieve 30,000 tonnes per month by July this year.

LONDON OPEN

Oil prices fell back below the US$30 threshold on Tuesday, putting the skids under London's blue-chips.

The price of a barrel of Brent crude subsided 2.4% to US$29.79 while a barrel of US light crude dipped 2.6% to about US$29.6.

Analysts blamed a supply glut and uncertainty over the Chinese economy, although some believe the price falls may be bottoming out.

Separately, a report showed that sustained low oil prices were forcing North American regional banks to cut credit lines to shale oil companies and make provisions, attracting short sellers.

The FTSE 100 Index tumbled 83.76 points to 5793. Connor Campbell at spread-betting firm Spreadex said: "The FTSE is already down nearly 1.5%, no doubt damaged by the fact that Brent Crude has tumbled back below the $30 per barrel mark. And it looks like the commodity’s continued collapse is (as ever) going to define the FTSE’s day."

On the economic front, Bank of England governor Mark Carney was due to give a speech explaining the UK’s low inflation and lack of impetus to raise rates, prompting economists to say it was unlikely to lift spirits.

Back in the markets, investors were raising a glass to Marston's (LON:MARS) after the pub and brewing group served up a good Christmas and New Year. Shares rose 6.7p to 157.4p.

But EasyJet flew 26p lower to 1605p as the budget airline reported lower revenue in the first quarter due partly to lower demand after the Paris terror attacks.

Dixons Carphone (LON:DC.) reported a record Black Friday and buoyant discounted sales after Christmas, lifting group like-for-like revenue in the 10 weeks to January 9 by 5%. The shares rose in early trading but fell back later, standing 6.7p adrift at 460.4p.

Elsewhere, Amerisur Resources (LON:AMER) ticked up 0.32p to 20.32p as the oil and gas producer and explorer focused on South America bought privately owned Platino Energy (Barbados) from COG Energy for US$7mln.

Union Jack Oil (LON:UJO) had strengthened its partnership with Egdon Resources (LON:EOG) in the UK onshore industry by taking a stake in the Laughton prospect in the East Midlands. Shares rose 4.35% to 0.12p.

Sound Energy (LON:SOU) was 0.25p up at 16.62p after agreeing terms to take a 75% stake in the Sidi Moktar onshore licences in Morocco.

MARKET PREVIEW

Britain's blue chip index is called to start lower after falling yesterday as the weak oil market continues to dominate movement.

In Asia overnight, stocks fell away again, with Japan's Nikkei 225 index plummeting 438 points and the Shanghai Composite Index in China shedding 95 points.

On Wall Street, the Dow Jones finished 209 points down at 15,885, while the tech heavy Nasdaq closed 73 down and the S&P500 was 30 points lower at 1,877.

Footsie closed down 23 at 5,877 but is today called by spreadbetters at IG Index, to open a further 58 points lower.

Oversupply issues continue to dominate weak oil trading and the price of the black stuff went into reverse on Monday on further pressure as the head of OPEC called for countries outside the cartel, which produce oil, to co-operate to help the glut problem.

The price of WTI crude is currently under US$30 a barrel at US$29.47.

And uncertainty in markets could be set to continue with a clutch of key data coming out.

In the US, Consumer confidence is due on Tuesday, ahead of consumer sentiment and fourth-quarter GDP on Friday.

Also in focus is the Federal Reserve meeting on Tuesday and Wednesday, as well as the Bank of Japan's meeting later in the week.

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