FTSE rises as oil weakens

A rebound by commodity issues fuelled strong gains by Britain's top share index on Thursday, as oil prices fell back on hopes for a peace deal in Libya, easing concerns over global economic demand. At the close, the FTSE 100 index was up 90.20 points, or 1.5 percent, at 6,005.09, ending above the 6,000 level for the first time since February 21, having fallen in eight of the previous nine trading days.
"The sun has come out today in true `risk-on' style, and after three days of suffering, London's headline-index is trying to turn positive for the week," said Will Hedden, sales trader at IG Index. Heavyweight energy issues and miners led the rally, with the two sectors having been hit recently by fears that the rising cost of oil could derail a fragile global economic recovery, damping demand for commodities.
Brent crude fell below $115 a barrel, with the Libyan government having accepted a plan that seeks a negotiated solution to the revolt in the North African country, a spokesman for Libyan ally Venezuelan President Hugo Chavez said. Oil explorer Tullow Oil was a good gainer, up 3.9 percent after announcing an oil discovery offshore Ghana. "While the oil price remains high, we believe the outperformance will continue (for Tullow)," said Richard Curr, head of dealing for CFD specialist Richard Curr.
He said Tullow stock was a "buy", with a target of 1,500 pence plus in the coming weeks, though he recommended "a tight stop loss to take into account any oil-price-driven volatility." Xstrata was a strong performer among the miners, up 2.6 percent after stakeholder Glencore reported bumper profits.
But gold miners African Barrick Gold and Randgold Resources missed out on the sector rally as the price of the precious metal fell, with recent safe-haven-related demand softened by the peace possibilities in Libya. Gold also fell as the dollar dropped back against the euro after European Central Bank chief Jean-Claude Trichet said the bank would exercise "strong vigilance" over inflation, raising the prospect that it might lift interest rates in Europe as soon as next month.
Travel firms benefited from an easing in worries over higher fuel costs, with TUI Travel adding 4.6 percent. TUI Travel was also boosted as German parent TUI's board gave the go-ahead for a possible initial public offering (IPO) of container shipping group Hapag-Lloyd, raising hopes for a mop-up bid for the British firm.
International Consolidated Airlines added 3.3 percent as the recently merged firm reported 8.2 percent growth in group premium traffic in February. US blue chips were up 1.4 percent by London's close, supported by the easier crude price as well as by news US weekly jobless claims dropped to a 2-1/2 year low. The jobless claims news came one day after a similarly robust ADP report on private sector hiring. Taken together, the two could bode well for Friday's key February payroll report.