LONDON MARKETS: FTSE 100 Gains On Respite For Oil Shares

By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- U.K. stocks rose Monday, moving toward their first advance in six sessions, as recently beaten-down oil shares posted modest advances.

The FTSE 100 picked up 0.3% to 6,320.17, on track to halt its longest losing streak since March. Last week, the benchmark fell 6.6%, marking the worst week since August 2011, according to FactSet.

The oil and gas group moved 1.6% higher on Monday, paring last week's drop of more than 3% that came as oil prices fell to five-year lows.

Ranking at the top of the FTSE 100 were oil producers Tullow Oil PLC , up 3.7%, and BG Group PLC , higher by 2%. Tullow shares have declined over past eight sessions, and BG Group has fallen in the last three sessions, each hit as oil prices have tumbled to five-year lows on oversupply concerns.

Also, energy-engineering firm Weir Group PLC was up 3.4%, and shares of oil-services provider Petrofac Ltd. picked up 2% following last week's 12.9% rout. Among oil majors, Royal Dutch Shell PLC picked up 1.6%, but BP PLC slipped 0.1%.

Oil prices on Monday were slightly on the mend. U.S. crude-oil futures (CLF5) were up nearly 1% above $58 a barrel, and Brent crude futures were up more than 1%, near $63 a barrel. Still, futures for the commodity are down roughly 40% for the year, and markets have been wrestling with questions about how low prices will go.

Commodity firms, particularly oil and gas companies, are dividend heavyweights in the U.K., accounting for nearly 13% of payouts across the market, "so if their profits take a battering, they will find it harder to grow their dividends," said Justin Cooper, chief executive of shareholder solutions at Capita Asset Services, in a report Monday. "We would not expect them to cut payouts in dollar terms, however."

Meanwhile, shares of BT Group PLC were up 0.5% as investors awaited an announcement on whether EE or rival provider O2 will land an acquisition bid from BT, which wants to return to the mobile-services market. EE is a joint venture of Deutsche Telekom AG and Orange SA , and O2 is owned by Telefonica .

Shares of BT rival Sky PLC were down by 1.9%, leading losses on the FTSE 100.

Also lower were shares of iron-ore miners BHP Billiton PLC (BHP) and Rio Tinto PLC (RIO) , down by 0.3% each. BHP was downgraded at RBC Capital Markets to underperform from sector-perform.

Separately, Australia on Monday projected iron-ore prices will trade around $60 a metric ton, much lower than its previous estimate of $92 a metric ton.

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