MARKET COMMENT: UK Shares Trade Higher As Oil Price Boosts Oil Stocks

LONDON (Alliance News) - London equities have pushed higher Friday with oil-related stocks benefiting from a rise in the price of oil, while a positive reaction to the ceasefire agreement reached for Ukraine Thursday continues to be offset by the uncertainty still surrounding the future of Greece.

At mid-morning, the FTSE 100 is up 0.7% at 6,873.26, the FTSE 250 is up 0.5% at 16,902.48, and the AIM All-Share is up 0.1% at 698.85.

"Brent crude crept this morning over the USD60 mark that was once seen as the lowest oil could go; the return to this psychologically significant level, the first time in 2015, is another reassuring sign from the commodity", says Spreadex analyst Connor Campbell.

Oil-related companies as Tullow Oil, BG Group, BP and Shell are trading among the best performers, benefiting from the rise in the Brent oil price, quoted at USD60.32 Friday morning. Tullow Oil is the biggest FTSE 100 gainer, up 4.8%, while BP and BG are up 2.9% and 1.7%, respectively. Shell 'B' shares are up 1.3%, while 'A' is up 1%.

In the FTSE 250, Afren is the best performer, up 7.5%, followed by Premier Oil, up 5.2%.

"Copper closed above USD260 per pound for the first time in over four weeks, dragging with it Vedanta and Antofagasta", Campbell also notes. Miner Antofagasta is up 2.2%, while FTSE 250-listed Vedanta is 4.2% higher Friday morning.

"The dual push from these commodities, alongside a clearing of clouds over Europe, looks set to give the FTSE a better close to the week than it could have hoped for," adds Campbell.

Also among miners, FTSE 100-listed Anglo American, up 2.5%, reported an expected drop in underlying earnings in 2014 on the back of weaker commodity prices. The miner also took a USD3.9 billion impairment charge, mainly related to its iron ore mine in Brazil, which led to a wider net loss. However, the company maintained its dividend unchanged.

Silver producer Fresnillo, up 0.2%, said a number of items including foreign exchange and write-downs will impact its financial results for 2014. The group said foreign exchange movement in 2014 between the dollar and the Mexican peso will lead to a deferred tax charge of around USD55 million, but said it will have "no corresponding effect on cashflow during the period".

Rolls-Royce Holdings is among the biggest losers in the blue-chips index, down 1%, after the aerospace group reported a big drop in pretax profit and revenue for the year, hit by negative currency translation, reduced defence spending and world macroeconomic uncertainty. The company said pretax profit for the year to the end of December was GBP67 million, a massive decline against the GBP1.7 billion reported a year earlier.

European stocks are higher Friday morning, with the French CAC 40 up 0.7% and the German DAX 30 up 0.6%. During the morning trade the CAC 40 reached 4,773,52 points, a level it hadn't seen since June 2008, while the DAX hit a record high at 11,013.82.

In the European economic front, Germany's economic growth accelerated by more than expected on domestic spending and exports in the fourth quarter, while investment dragged expansion in France.

German gross domestic product advanced 0.7% sequentially, much faster than a modest 0.1% rise in the prior quarter, while the French economy expanded only 0.1% sequentially, slower than the third quarter's 0.3% rise.

GDP data from Eurozone also came in stronger than expected, rising 0.3% sequentially, faster than the 0.2% growth seen in the third quarter. The rate was expected to remain unchanged at 0.2%.

The market continues to keep an eye on Greece. "Investors appear confident that a Greek disaster can also be averted on unconfirmed reports that German and Greek officials were working on a compromise in Brussels as both sides looked to soften their positions, before the Eurogroup talks which are scheduled to begin on Monday," says Michael Hewson, Chief Market Analyst at CMC Markets UK.

"The sticking points though are likely to remain the size of the debt and any financing needs beyond the end of this month, which means anyone hoping for a quick resolution are likely to be disappointed", Hewson adds.

Still to come in the economic calendar Friday, the UK Leading Economic Index is due at 1330 GMT.

US futures point to a higher opening, with the DJIA and S&P 500 pointed up 0.2% and Nasdaq 100 up 0.3%.

By Daniel Ruiz; danielruiz@alliancenews.com

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