LONDON MARKETS: FTSE 100 Jumps To 3-month High, As Oil Rally Buoys BP And Shell

By Carla Mozee and Sara Sjolin, MarketWatch

Vodafone strikes nearly $23 billion deal with Liberty Global

London's benchmark for blue-chip stocks pushed higher Wednesday, buoyed largely by shares of oil producers, which rose as crude prices rallied in the wake of the U.S. decision to resume sanctions on Iran.

Meanwhile, shares of Vodafone PLC popped higher on confirmation that the British telecommunications company has agreed a nearly $23 billion deal to buy some European assets from Liberty Global PLC.

How markets are moving

The FTSE 100 index climbed 1.3% to end at 7,662.52, closing at its highest level since Jan. 29, according to FactSet data.

The pound rose to $1.3569 from $1.3546 late Tuesday in New York, as traders looked head to the Bank of England meeting on Thursday.

Read:The pound at $1.3850 or $1.3350? It all rests on the BOE's 'Super Thursday', ING says (http://www.marketwatch.com/story/the-pound-at-13850-or-13350-it-all-rests-on-the-boes-super-thursday-ing-says-2018-05-09)

What's driving markets

The FTSE 100 was outperforming most of its counterparts in Europe as shares of BP PLC and Royal Dutch Shell PLC scaled toward the top of the index. The oil-and-gas sector has a weighting of nearly 17% on the FTSE 100, the second-largest sector after financials, according to FactSet data.

Shares of oil producers rose as U.S. crude and Brent prices jumped almost 3% on Wednesday (http://www.marketwatch.com/story/oil-rebounds-back-above-70-a-barrel-as-supply-optimism-overshadows-iran-deal-2018-05-09), bringing West Texas Intermediate above $71 a barrel and to highs not seen in more than three years.

Oil prices, which have been swinging in recent sessions, initially dipped but eventually advanced after U.S. President Donald Trump late Tuesday said he would impose "powerful" new sanctions on Iran as the U.S. withdraws from the Iran nuclear deal (http://www.marketwatch.com/story/trump-says-us-is-withdrawing-from-iran-nuclear-deal-2018-05-08).

The reinstatement of Iranian sanctions could result in tighter global oil supplies, because they make it more difficult for Iran to export oil, according to some analysts.

Read:U.S. out of Iran deal -- Boeing will lose out on $20 billion in business (http://www.marketwatch.com/story/boeing-will-lose-out-on-20-billion-in-iran-deals-as-airbus-ge-impacted-2018-05-08)

In Brexit news, U.K. Prime Minister Theresa May suffered another blow to her divorce plans after the House of Lords in a vote late on Tuesday backed calls for Britain to remain in the single market after the EU exit.

What are strategists saying?

"In contrast to yesterday the FTSE 100 has soared today, boosted by the energy firms on expectations that higher oil prices will result from the Iran deal," said Chris Beauchamp, chief market analyst at IG, in a note.

"It may not be quite as clear-cut as that, at least not in the short term, since oil's remarkable run has now reached the stage where it is being talked about outside of financial markets. This is usually a sign that the rally has at least peaked for the time being," he added.

Stock movers

BP PLC (BP.LN) (BP.LN) gained 3.9%, and Royal Dutch Shell PLC (RDSA.LN) (RDSA.LN) bulked up 3.4% as oil prices jumped.

Imperial Brands PLC (IMBBY) (IMBBY) jumped 6.2% to the top of the FTSE 100 after the tobacco company laid out plans to sell assets (http://www.marketwatch.com/story/imperial-brands-profit-down-25-plans-2b-selloff-2018-05-09) to raise around 2 billion pounds ($2.7 billion) in the next year or two.

Burberry Group PLC shares (BRBY.LN) (BRBY.LN) tumbled 6.1% after Belgian holding company Groupe Bruxelles Lambert (GBLB.BT) said it has sold a 6.6% stake (http://www.marketwatch.com/story/groupe-bruxelles-lambert-sells-burberry-stake-2018-05-09) in the British luxury goods maker.

Vodafone (VOD.LN)(VOD.LN) ended 0.6% higher after the company agreed to buy operations in Germany, Hungary, Romania and the Czech Republic from Denver-based cable giant Liberty Global PLC (LBTYA). The deal, valued at EUR19 billion ($23 billion) (http://www.marketwatch.com/story/vodafone-to-pay-23-billion-for-liberty-assets-2018-05-09), doesn't include Liberty businesses in the U.K. and Ireland, which compete with Vodafone's.

Compass Group PLC (CPG.LN) dropped 4.8% as the food services company posted a fall in first-half 2018 pretax profit (http://www.marketwatch.com/story/compass-group-profit-falls-hit-by-fx-effects-2018-05-09) to GBP792 million ($1.07 billion), which is said was partly due to foreign exchange effects.

(END) Dow Jones Newswires

May 10, 2018 03:36 ET (07:36 GMT)

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