Oil producer shares rise on pipeline leak, but supermarkets largely pull back
U.K. blue-chip stocks finished with gains Tuesday, as shares in energy-related companies rallied. However, some supermarket shares were dragged down by new industry sales figures.
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How markets are moving: The FTSE 100 index rose 0.6% to end at 7,500.41, building on Monday's rise of 0.8% (http://www.marketwatch.com/story/ftse-100-leads-the-way-in-europe-driven-higher-by-softer-pound-2017-12-11).
The London benchmark finished at its highest level since Nov. 8, according to FactSet data. It's showing a 5% gain for the year.
The pound bought $1.3324, down from $1.3339 on late Monday in New York.
What's moving markets: Shares of oil producers rose as West Texas Intermediate crude and Brent futures initially extended the gains logged on Monday, after owners of North Sea oil pipeline, The Forties, announced a shut down for weeks to repair a leak.
While the outage is a significant supply disruption -- the pipeline carries supplies from more than 80 major fields -- it has a wider impact in that the Forties's flows feed into a key price benchmark for global oil.
On Tuesday, February Brent crude jumped more than 1% (http://www.marketwatch.com/story/brent-oil-rises-to-fresh-212-year-high-as-north-sea-pipeline-outage-reverberates-2017-12-12) to trade around its highest level since mid-2015. The contract later turned negative, but energy stocks remained in the green.
Shares of BP PLC (BP.LN) (BP.LN) climbed 2.5%, and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) was up 1.5%.
What strategists are saying: "The FTSE 100 is higher as energy stocks are receiving a boost from the upturn in the oil market on account of the Forties North Sea pipeline being closed for maintenance," said David Madden, a CMC Markets UK analyst, in a note.
"Brent crude oil hit a level not seen since early June 2015, and that has pushed up the price of Royal Dutch Shell and BP."
Inflation data: U.K. inflation has hit its highest level since March 2012, boosted by higher air fares, the Office for National Statistics reported. The consumer-price index grew 3.1% in the 12 months to November. Analysts had expected the CPI to hold at 3%, according to a FactSet survey.
"Sterling rallied on the back of the figures, but the positive move was short lived," CMC's Madden said.
The inflation reading is more than a full percentage point above the Bank of England's target. The U.K. central bank will release its next policy decision on Thursday, but no changes are expected. Policy makers led by Mark Carney in November raised the benchmark interest rate for the first time in a decade, by a quarter percentage point to 0.5%.
Supermarket sweep: Kantar Worldpanel said Tuesday that sales for the top four U.K. grocers grew in the 12 weeks ended December, but each lost market share (http://www.marketwatch.com/story/top-4-uk-supermarkets-lift-sales-but-lose-share-2017-12-12).
Wm Morrison Supermarkets (MRW.LN) fell 4.5% and J Sainsbury (SBRY.LN) was down 4.1% while rival Tesco PLC (TSCO.LN) was up 0.1%.
Other stock movers: Ashtead PLC (AHT.LN) tacked on 2% as the equipment-rental company said it would start a share buyback program of up to GBP1 billion (http://www.marketwatch.com/story/ashtead-to-buy-back-up-to-1-billion-in-shares-2017-12-12) ($1.33 billion) and that fiscal 2018 results should come in above expectations.
(END) Dow Jones Newswires
December 12, 2017 14:16 ET (19:16 GMT)