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LONDON (Alliance News) - A late rebound in oil prices fuelled a rally in the FTSE 100 Thursday, but the index was unable to take back all of the losses from earlier in the day.

Brent crude oil slipped below the USD30 a barrel mark late Wednesday, undermining investor sentiment at the London open Thursday. Brent fell to as far as USD29.69 a barrel early Thursday but by the equities close was quoted at USD30.35.

West Texas Intermediate had an even more pronounced turnaround, as it regained its premium over the London benchmark. WTI was quoted at USD31.00 a barrel at the London equities close.

Oil majors BP, up 2.1%, Royal Dutch Shell 'B', up 2.1%, and BG Group, up 2.8%, were all amongst the best performers in the FTSE 100, while in the FTSE 250, oil services companies Petrofac and Amec Foster Wheeler closed up 3.3% and 4.0%, respectively.

As oil prices were staging their late rally, the price of gold was going in the opposite direction. At the London close, the metal traded at USD1,082.80 an ounce, compared to USD1,088.10 at the same time on Wednesday.

The FTSE 100 closed down 0.7% at 5,918.23 points, having earlier been down over 2.0%. The mid-cap FTSE 250 index still ended firmly in the red, down 1.7% to 16,413.27, while the AIM All-Share closed down 1.4% at 708.34.

In Europe, the French CAC 40 index lost 1.8%, and the German DAX 30 shed 1.7%.

Wall Street was clawing backing some of Wednesday's heavy losses. At the London close, the Dow 30 index was up 0.9%, the S&P 500 up 0.8% and the Nasdaq Composite up 0.5%.

The Bank of England kept its record-low bank rate and quantitative easing programme unchanged as expected, and policymakers observed that downside risks to global growth and the recent decline in oil prices could depress the near-term inflation outlook.

The Monetary Policy Committee, governed by Mark Carney, voted 8-1 to keep the UK base rate unchanged at 0.50%. The interest rate has been at the current record low level since early 2009. The MPC voted unanimously to retain the asset purchase plan at GBP375 billion.

Ian McCafferty has been the sole dissenter since August, seeking a 25-basis-point rate hike, arguing that the risks to domestic cost growth remained to the upside and, given the recent depreciation of sterling, were less likely to be offset by the drag from earlier sterling appreciation.

"Today's BoE minutes suggest, to us, that rate setters are firmly in wait-and-see mode. They gave no signals, in our view, that rate hikes are imminent," said Rob Wood, UK economist at Bank of America Merrill Lynch.

"Given the inflation outlook they do not have to hike imminently, and it pays to worry more about downside than upside risks when interest rates are close to the zero bound," Wood added.

The pound spiked briefly following the decision and minutes, as there was some expectation that McCafferty would drop his call for a hike. By the London equities close, though, sterling traded the dollar at USD1.4391, down from USD1.4415 the day before.

Meanwhile, minutes from the European Central Bank's December policy meeting revealed rate-setters had been divided on the size of the interest rate reduction that they agreed at that meeting and had explored the possibility of further easing in the future.

On December 3, the bank cut its deposit facility rate by 10 basis points to a record low -0.30%. The size of the reduction was at the smaller end of the 10-20 basis point cut economists had forecast.

"Some members expressed a preference for a 20 basis point cut in the deposit facility rate at the current meeting, mainly with a view to strengthening the easing impact of this measure and reflecting the view that, to date, no material negative side effects on bank margins and financial stability had emerged," the accounts of the meeting said.

The ECB's next policy meeting is on Thursday next week.

The euro depreciated against other currencies after the minutes, and at the London close traded the dollar at USD1.0852, compared to USD1.0824 on Wednesday.

In UK company news, Tesco closed up 4.7% after the grocer's Christmas sales figures beat analyst expectations, adding to a series of positive trading updates from UK supermarkets this week.

The UK's largest retailer reported a 2.1% rise in group like-for-like sales in the six weeks to January 9, with 1.3% growth in the UK and 4.1% growth internationally, boosted by an increase in volumes of 3.5% and in transactions of 3.4%.

Tesco's home shopping service achieved a record number of orders delivered in one day on December 22, while clothing grew strongly ahead of the market supported by seasonal general merchandise ranges and its Christmas gifting offer, the company said.

However, in its third quarter, which was the 13 weeks ended November 28, Tesco said group like-for-like sales fell 0.5% year-on-year, as a 1.5% decline in the UK offset 2.9% growth internationally. In the two periods put together, covering the 19 week period to January 9, group like-for-like sales increased 0.4%, which Tesco said was its first reported group like-for-like increase in over four years.

Analysts were positive on both Tesco's third quarter and its Christmas trading, as both results beat their expectations.

Shore Capital said Tesco's results were "very encouraging", with the third-quarter UK like-for-like sales decline beating its estimation of a 2.0% drop. Cantor Fitzgerald analyst Mike Dennis said Tesco's actual result in the quarter beat the consensus forecast of a 2.5% decline.

Burberry Group ended up 0.9% after it said like-for-like sales were flat in the third quarter of its financial year, a better performance than in the second quarter, as mainland China, a key market for the group, returned to growth.

The British heritage brand said its retail revenue for the quarter was GBP603.0 million. Retail revenue was flat on a like-for-like basis, an improvement on the 4.0% decline seen in the second quarter. Total retail revenue was up 1.0% in constant currencies. The group saw an improvement in its Asia Pacific business. Though Hong Kong remained weak, mainland China returned to growth.

Burberry also said its profit expectations for the full year remained unchanged, as cost-cutting measures have helped to offset its slowing sales growth. It added it will accelerate its cost-cutting plans in order to maintain its margins within a difficult environment and said it will review how to improve its organic growth opportunities.

In the FTSE 250, Restaurant Group was by far the worst performer, down 15% and hitting its lowest price since July 2013. The restaurant operator, which runs Frankie & Benny's, Chiquito and Garfunkel's chains, said it expects its full-year earnings to be substantially ahead of the previous year after revenue rose by 8.0%. But it warned it is more cautious about 2016 on concerns about like-for-like sales trending lower.

The company said recent data from the retail sector and the wider economy has shown that the trading environment for many consumer-facing businesses has been tougher in recent months than it was earlier in 2015.

B&M European Value Retail was the best mid-cap performer, adding 8.1%. The discount retailer reported growth in revenue in the third quarter of its financial year as strong sales in the UK offset a weaker performance in Germany, the latter hit by the weak euro.

Total sales in the 13 weeks ended December 26 rose 23% to GBP647.8 million from GBP527.9 million in the same period the year before. B&M said it achieved a record Christmas season in the UK, despite a challenging market, serving over four million customers in the Christmas week as it continued to gain market share.

In the economic calendar Friday, Italian consumer price index readings are at 0900 GMT, the Bank of England's credit conditions survey is at 0930 GMT, and eurozone trade balances are at 1000 GMT.

In the afternoon, the New York State manufacturing index is at 1330 GMT, as are US retail sales and producer price indices. US capacity utilisation and industrial production are at 1415 GMT, and the Reuters/Michigan Consumer Sentiment Index at 1500 GMT.

In a quieter UK corporate calendar, there are trading statements from information services company Experian, housebuilder Bovis Homes Group and fashion retailer Bonmarche Holdings. IT assurance company NCC Group reports half-year results.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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