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BP pulls FTSE 100 out of the red amid recession worries

Credit: REUTERS/PETER NICHOLLS

London's FTSE 100 rose on Wednesday, propped up by gains in oil major BP, which offset losses in tobacco giants after American rivals Philip Morris and Altria confirmed merger talks against the backdrop of a prolonged trade war and recession fears.

By Muvija M and Shashwat Awasthi

Aug 28 (Reuters) - London's FTSE 100 rose on Wednesday, propped up by gains in oil major BP, which offset losses in tobacco giants after American rivals Philip Morris and Altria confirmed merger talks against the backdrop of a prolonged trade war and recession fears.

The FTSE 100 .FTSE rose 0.2% by 0810 GMT, reversing earlier losses, while the midcap index .FTMC inched 0.3% lower, after gaining in the previous session from the opposition parties' pledge to avert a no-deal Brexit.

A 2% rise for BP BP.L powered roughly half of the index's gain in terms of percentage points. The British oil major announced a deal to sell all its Alaskan properties for $5.6 billion to privately held Hilcorp Energy.

Shell RDSa.L, the index's most valuable company, also advanced as crude prices climbed.

A sharp slide in sterling after a BBC journalist said that Britain's Queen Elizabeth could be asked as early as Wednesday to agree to suspend parliament also boosted the exporter-heavy index.

Meanwhile, British American Tobacco BATS.L and Imperial Brands IMB.L lost nearly 2% after news that Philip Morris PM.N and Altria MO.N were in talks to reunite.

The FTSE 100 is still on course for its steepest monthly fall in four years, hammered by sharp escalations in the Sino-U.S. trade war that saw China letting its currency fall below the key 7-per-dollar level for the first time in more than a decade.

"Optimism of a resolution has drifted off into the distance as investors attempt to second guess the next moves in the trade dispute," London Capital Group analyst Jasper Lawler said.

Back on Wall Street, the yield on the 10-year Treasury bond US10YT=RR fell below that on the two-year US2YT=RR, a sign that markets foresee a recession.

In news driven moves, Petrofac PFC.L fell 1% after the oilfield services provider's core profit and new orders dropped due to an ongoing probe into its contract dealings in Saudi Arabia and Iraq.

Larger rival Wood Plc WG.L fell nearly 4% after Petrofac results.

Small-cap tour operator Thomas Cook TCG.L plummeted 18% after a substantial agreement on terms of a rescue package, which the company said could lead to its shares being de-listed.

"Investors are simply trying to cash out and crystalise any value left in their investment before the refinancing, for fear there could be nothing left if they wait," AJ Bell analyst Russ Mould said.

(Reporting by Muvija M and Shashwat Awasthi in Bengaluru; Editing by Sriraj Kalluvila and Arun Koyyur)

((muvija.m@tr.com; within UK +44 20 7542 1810, outside UK +91 80 6749 3638;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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