Britain’s top share index fell on Thursday, dragged down by an oil-price-related slump in commodity stocks, but outperforming most European markets as a strategic acquisition boosted telecom firm BT Group.
BT rose 4.5 per cent to a 14-year high after saying it agreed a £12.5 billion ($19 billion) deal for mobile operator EE, with the share price absorbing news that the firm will raise £1 billion through a placing of new stock to help fund the deal.
“BT is the biggest service provider in the UK... and now they’re taking on EE’s 33.8 per cent share in the mobile sector, which is significant,’’ Trent Earwaker, trader at LONTRAD, said.
“It would certainly seem like good value, but that depends on whether prices will have to rise by much to help pay for it.’’
Energy and basic materials stocks took 30 points off the index, with Tullow Oil, BG and Royal Dutch Shell 2-3 per cent lower.
Brent crude fell again after crashing in late trade on Wednesday, taking losses since the European market close in the previous session to over 4 percent.
The FTSE 350 Mining sector fell 1.6 per cent as copper prices also slipped.
The main FTSE 100 index was down 42.62 points or 0.6 per cent at 6,817.40 at 0911 GMT. While the index’s heavy weighting in oil stocks saw it lag Germany’s DAX, it outperformed falls of over 1 per cent in peripheral euro zone markets after the European Central Bank unexpectedly said it would stop accepting of Greek bonds in return for funding.
Coca Cola Hellenic, which has substantial exposure to Greece, was a top faller, down 2.8 per cent.
The broad euro zone Euro STOXX 50 index was down 0.8 per cent.
Earnings reports from British companies were mixed. AstraZeneca was down 3 per cent after it said fourth quarter results missed expectations.
“AstraZeneca has disappointed — revenue is up but weaker headline figures will weigh on the shares,’’ Mark Ward, head of execution trading at Sanlam Securities, said.
Artificial hip and knee manufacturer Smith & Nephew rose over 1 per cent after it posted a 7 per cent rise in trading profit in the fourth quarter, and said it was confident it would increase both revenue and its trading profit margin in 2015.
Compass Group rose 2 per cent after results, as the world's biggest catering firm, maintained its full-year outlook.