LONDON MARKETS: FTSE 100 Rises As Oil Aims For $50 A Barrel

By Carla Mozee, MarketWatch

M&S slammed after warning; pound extends gains

Stocks in the U.K. moved higher Wednesday, with energy shares rising alongside oil prices, but Marks & Spencer Group PLC shares suffered their worst fall since 2008 in the wake of the retailer's financial results.

The FTSE 100 claimed a 0.6% rise to 6,257.35, with energy, mining and financial shares gaining ground. A win Wednesday would be the benchmark's second in a row, after Tuesday's session closed up 1.4% (http://www.marketwatch.com/story/ftse-100-edges-up-as-miners-oil-companies-find-a-higher-toehold-2016-05-24) to a three-week high.

Investors were keeping tabs on oil prices, as both West Texas Intermediate oil and Brent crude aimed for $50 a barrel. Oil prices found support after industry data late Tuesday showed a bigger-than-expected decline (http://www.marketwatch.com/story/oil-prices-rally-as-api-data-show-us-crude-supply-down-51-million-barrels-sources-2016-05-24) in weekly U.S. crude supplies. Later Wednesday, the U.S. Energy Information Agency will release its own weekly report on oil stockpiles.

Shares of oil major BP PLC (BP.LN) (BP.LN) climbed 1.2% and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) was up 0.8%. Shell during the trading session said it plans to cut an additional 2,220 jobs (http://www.marketwatch.com/story/shell-to-cut-an-additional-2200-jobs-in-response-to-low-oil-prices-2016-05-25) as the company deal with an overall environment of low oil prices.

But gains for the blue-chip benchmark were capped by a slide in Marks & Spencer (MKS.LN). The high street retailer's stock tumbled 8.7%, heading toward its worst session since August 2008, according to FactSet. M&S warned that its planned investment into its clothing and home-products business would hurt profit margins in the near term (http://www.marketwatch.com/story/marks-spencer-profit-down-19-warns-on-margins-2016-05-25).

"Potential shoppers such as the younger generation still regard M&S in the same manner as a trip to the dentist, with the lines, image and experience all in need of radical refreshment," said Richard Hunter, head of research at Wilson King Investment Management, in a note.

"This is something of which the company is acutely aware and will be continuing to attempt to steer a different course," he said.

Looking at shares of other apparel retailers, Next PLC (NXT.LN) was off 1.2% and Burberry PLC (BRBY.LN) slipped 0.6%.

Other movers: Meanwhile, Dixons Carphone PLC shares (DC.LN) were up 0.4% as the electronics retailer forecast full-year pretax profit coming in at the top half of its previous guidance (http://www.marketwatch.com/story/dixons-carphone-sees-fy-profit-at-top-of-guidance-2016-05-25).

Barclays PLC shares (BCS) (BCS) were up 1.2%, brushing aside a ratings downgrade to hold from buy at Investec. While the stock is not expensive, "we think its near-term outlook for earnings and returns remains very challenging indeed," said analyst Ian Gordon in a note.

Gordon noted U.K. Treasury chief George Osborne's view that a June 23 British referendum that resulted in keeping the U.K. in the European Union would "underscore 'lower for longer' interest rates and to support sterling. Such a potential outcome would not help Barclays," Gordon said.

Sterling: The pound was trading around a three-week high against the U.S.dollar, buying $1.4682 compared with $1.4632 late Tuesday. The pound surged roughly 1% during Tuesday's session after a new poll (http://www.marketwatch.com/story/pound-rises-as-poll-shows-brexit-support-waning-2016-05-24) showed more likely voters wanted the U.K. to stay an EU member.

"The 'Remain' camp looks set to capitalise on the Brexit warnings issued by the Treasury yesterday, with voters facing a deluge of conflicting claims exacerbating uncertainty amongst voters," said Ana Thaker, market economist at PhillipCapital UK, in a note.

"However, if we see the 'Remain' camp consistently ahead, the steep rises in sterling that follow these poll results may abate to a steady rise," she said.

(END) Dow Jones Newswires

May 25, 2016 07:36 ET (11:36 GMT)

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