Market report: Tuesday close
Shares of BG surged to record highs today, rising 71p to 1293p amid signs that the oil and gas explorer may have struck it rich in Brazil for the second time in six months. It eventually closed 66p dearer at 1288p.
Overnight, the head of Brazil's National Petroleum Agency said the Sugar Loaf structure in the Santos Basin could contain a whopping 33bn barrels of oil equivalent - five times the size of Tupi, BG's other venture in the region - which would make it the biggest discovery in 30 years.
BG has exposure to Sugar Loaf through its BM-S-9 block and newsflow on the structure is likely to continue over coming months, with Exxon expected to start drilling later this year, followed by BG. It was estimated last October that the Tupi Field could contain anything from eight billion to 30bn barrels of oil and gas. BG has a 25% stake in the project.
Centrica, which was demerged from British Gas a few years ago fell ¼p to 303p. There was big turnover in the shares towards the close of business yesterday, including one block trade which may have contained 40m shares.
BP firmed 3½p to 552½p with the management seemingly unperturbed by the news that Chinese sovereign wealth fund SAFE Investment had splashed out £1bn on mopping up a 1% stake in the oil giant. BP said it was aware of the purchase but had no reason to be concerned about it. SAFE manages China's $1.7 trillion currency reserves.
The latest boost to the oil price, which has now topped $112 a barrel in the US, attracted buyers for the exploration companies. Cairn Energy put on 78p to 3041p, Dana Petroleum 55p to 1327p, and Royal Dutch Shell 31p to 1865p.
Shares generally rebounded, helping investors to claw back most of yesterday's losses. The FTSE 100 index rallied 75.29 points to 5906.9, despite fresh falls on Wall Street overnight and a mixed performance in the Far East today.
A 12% jump in pre-tax profits last year enabled Tesco to put on 28½p at 419½p. The City also gave the thumbs-up to the latest trading update from Burberry, up 42½p at 438½p. This is one retailer that has made progress despite tough trading conditions on the High Street. The luxury goods group reported an 18% increase in underlying sales during the second half, driven by strong growth in its retail and wholesale operations. It reports full-year figures at the end of next month.
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But another retailer failed to live up to expectations amid signs that growth is slowing. Carphone Warehouse fell 35½p to 231p, the worst blue-chip performer.
AstraZeneca has signed a settlement deal in its Nexium patent infringement litigation against Ranbaxy Laboratories. This will allow Ranbaxy to start sales of a generic version of Nexium under licence from AstraZeneca on 27 May 2014.
AstraZeneca and Ranbaxy have entered into agreements under which Ranbaxy will formulate a portion of Astra's US supply of Nexium from May 2010, including provisions for the manufacture of the active pharmaceutical ingredient in Nexium, from May 2009. Dresdner Kleinwort has raised its rating on the drugs giant from hold to buy and its target from 1970p to 2350p. Astra shares shot up 141p to 2122p, making it the best performer among the top 100 companies.
Mears Group rose 8¼p to 284p after its specialist housing division landed a clutch of new contracts worth £57m with Watford Community Housing Trust, Castle Morpeth Housing and Catalyst. Arbuthnot Securities says the wins underpin its profit forecasts and the shares deserve a higher rating.
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TOMORROW'S AGENDA
• JPMorgan Chase unveils first-quarter results ahead of figures from Wall Street rivals Citigroup and Merrill Lynch later in the week. The banking giant, which last month announced plans to buy stricken competitor Bear Stearns, has so far escaped comparatively lightly from the current crisis but is expected to report that its profits have nearly halved.
• Following JD Sports' numbers today, rival sportswear chain JJB Sports delivers preliminary results. There is likely to be little to cheer for investors, with forecasts of a 26% drop in full-year profits to £33.8m. JJB remains heavily reliant on football shirt sales and has suffered in the wake of England's failure to qualify for Euro 2008, while margins have been squeezed by aggressive stock clearances. Shareholders will be keen to hear new chief executive Chris Ronnie's plans to revive the flagging business and reduce the company's dependence on replica kit.
• Peroni and Carling Black Label brewer SAB Miller updates the City on trading. The drinks giant, which specialises in emerging markets, is tipped to reveal that volume growth deteriorated further in the fourth quarter after a sharp slowdown in the previous three months. Goldman Sachs analysts believe price increases in response to rising ingredients costs have largely caused the decline.
• Experian, one of Britain's biggest credit rating agencies, is predicted to say full-year profits are either in line or just below market forecasts when it publishes a trading statement for the second half of the year. Full-year profits are expected to be around £390m, which will include a contribution from the firm's new acquisition, Brazilian credit checker Serasa.
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