FTSE gains as cheaper oil helps cruise operator Carnival

Reuters Updated - January 24, 2018 at 02:04 PM.

Britain’s top share index rose on Monday, as falling crude oil prices boosted cruise operator Carnival and British engineering company GKN gained after a leading investment bank improved its rating for the shares.

GKN r ose 2.6 per cent, leading the gains in the FTSE 100, after Credit Suisse raised its price target for the stock to 410 pence from 380 pence and reiterated its “outperform’’ rating.

Stocks were also helped by speculation of further mergers and acquisitions among drug companies, after the Dublin-based drugmaker Shire said it had agreed to buy NPS Pharmaceuticals for $5.2 billion.

Acquiring New Jersey-based NPS will give Shire two important new drugs. Its

shares rose nearly 2 per cent in early trading but retreated later as investors scrutinised the financial implications of the deal.

The takeover continues the deal-making of 2014 among drug companies, as they jockey for promising assets amid a wave of new drugs emerging from research laboratories.

“Healthcare remains top of the list in terms of likely M&A activity, with Shire news reinforcing this expectation,’’ said Keith Bowman, an equity analyst at Hargreaves Lansdown.

“The NPS takeover will give Shire two significant new drugs, diversifying Shire’s drug portfolio further.

“Some beneficiaries of a lower oil price, such as Carnival, are adding to the market’s upside.’’

Holiday cruise company Carnival rose 2.4 per cent, the second-biggest gainer in the FTSE 100 index, after oil prices fell further following a cut in short-term forecasts by Goldman Sachs. Oil prices are at their lowest since April 2009 and have fallen for seven straight weeks.

The benchmark FTSE 100 index was up 0.3 per cent at 6,521.13 points by 0914 GMT after falling more than 1 per cent in the previous session. However, energy shares were under pressure, with the UK oil and gas index falling 0.6 percent.

Among other movers, energy supplier SSE fell 2.2 per cent , the biggest loss in the FTSE 100 index. Britain’s pposition Labour Party said it would try to introduce a law enabling the energy regulator to force companies to cut prices when wholesale costs declined.

British utility Centrica fell 1.4 per cent.

Mid-cap oil and gas producer Afren slipped 18 per cent after saying it was considering options for its operations in Barda Rash in Iraqi Kurdistan, citing poor drilling results.

Published on January 12, 2015 10:20