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BT pushes market higher despite rocky day for oil prices

Published 26/07/2016

The FTSE 100 was up 13.9 points to 6724.03
The FTSE 100 was up 13.9 points to 6724.03

The London market shrugged off turbulent oil prices to push higher after telecoms giant BT heeded calls to make its Openreach division a "distinct company" within the group.

The FTSE 100 was up 13.9 points to 6724.03, with shares in BT rising more than 3% or 12.2p to 399.7p after it welcomed Ofcom's proposals rather than face a full sell-off.

The proposals include making Openreach a distinct company with its own board, including a majority of non-executive directors not affiliated to BT Group.

The rise on the UK's premier index came despite a rocky day for oil prices, which slipped to their lowest levels since May, before regaining some poise to trade up 0.1% to 44.72 US dollars a barrel.

The ructions were triggered by fears that a glut could resurface on the same scale as 2014 when prices tumbled from highs above 100 US dollars a barrel.

The pound managed to recover after it fell in the wake of comments from Bank of England policymaker Martin Weale who indicated that the UK economy may require a dose of monetary stimulus next month.

Mr Weale, a member of the Bank's Monetary Policy Committee (MPC), shifted his stance in favour of an interest rate cut or an expansion of quantitative easing following Friday's flash PMI survey, which showed the UK economy had slumped at its fastest rate since the financial crisis.

In an interview with the Financial Times, Mr Weale said the Markit Flash UK Composite Output Index results had been the main factor that changed his mind.

He added: "I see things rather differently from what I would have done had we not had those numbers and the material point is that they were collected after July 12, so after the initial shock of the referendum."

The value of the pound fell in early morning trading, but recovered some ground to trade marginally up against the dollar at 1.313 US dollars. Sterling was also slightly up against the euro at 1.195 euros.

In Europe, Germany's Dax was 0.49% ahead, while the Cac 40 in France rose by a modest 0.15%.

Across the Atlantic, the Dow Jones Industrial Average was down 0.26% ahead of the US Federal Reserve's monetary policy meeting on Wednesday.

In UK stocks, supermarket giant Tesco was the biggest faller after Kantar Worldpanel f igures for the 12 weeks to July 17 showed a 0.7% dip in sales year-on-year.

Shares were off 4% or 6.6p to 155.5p after the report also highlighted that its market share shrank 0.2 percentage points to 28.3% .

Oil major BP was also in the doldrums after p rofits plunged 44% to 720 million US dollars (£549 million) in the second quarter.

The slump in underlying replacement cost profit, the benchmark industry measure, comes as the sector battles low oil prices.

BP boss Bob Dudley said: "Compared with a year earlier, the underlying second-quarter result was impacted by lower oil and gas prices and significantly lower refining margins, but this was partly offset by the benefit of lower cash costs throughout the group as well as lower exploration write-offs."

Shares were down more than 1% or 5.8p to 434.6p.

The biggest risers on the FTSE 100 Index were Provident Financial up 148p to 2748p, Mondi up 63p to 1531p, GKN up 11.1p to 301p, Fresnillo up 66p to 1867p.

The biggest fallers were Tesco down 6.6p to 155.5p, Barratt Developments down 13.7p to 405.3p, Berkeley Group down 82p to 2545p, easyJet down 30.5p to 989.5p.

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