Britain’s top share index rose towards a 4-1/2 month high on Tuesday, boosted by commodity stocks after BP beat earnings expectations, reassuring investors over the resilience of the oil sector.
Oil major BP rose 4 per cent after it beat quarterly profit expectations despite taking a $3.6-billion impairment charge in the face of low oil prices.
A slide in Brent crude, down 50 per cent since last June, prompted BP to cut its capital expenditure, although it was able to maintain a quarterly dividend of 10 cents per ordinary share.
BP delivered “a strong set of numbers even with the impairment charges. On a standalone basis, BP represents good value and with these numbers, we expect buying to come back into not only the sector but BP today,’’ said Atif Latif, director of trading at Guardian Stockbrokers.
“With 2014 being a tough time for the sector, we see evidence of stabilisation in 2015. Much of this will be driven by cuts in capex.’’
Not all oil firms have beaten expectations. BG Group fell 1 per cent after it wrote down the value of its business by nearly $6 billion in 2014, forcing it to slash 2015’s investment budget by around 30 per cent compared to the prior year.
In all, oil and materials stocks added 30 points to the FTSE 100, with other oil firms and miners rallying with firmer commodity prices.
The FTSE 100 was up 54.82 points or 0.8 per cent at 6,837.37 points by 0822 GMT. The index is just a few dozen points away from its January peak of 6,864.97 — the highest since September 2014.
Among fallers, British outsourcing group Capita dropped 3 per cent after it said it agreed to acquire avocis, a customer contract management company operating in Germany, Austria and Switzerland, for €210 million.
Aberdeen Asset Management dropped 2.5 per cent after it reported a small drop in funds under management in the December quarter, as outflows outstripped gains in investment portfolios and foreign exchange.