Worries over potential disruption to crude oil supplies amid the ongoing crisis in Libya have triggered another downbeat session in London.
Oil prices on the New York Mercantile Exchange neared 96 US dollars a barrel – the highest since October 2008 – as the Libyan government cracked down on protesters and foreign energy companies suspended oil production. Libya holds the most oil reserves in Africa and is the world’s 15th-largest crude exporter at 1.2 million barrels per day.
As investors worried that the global economic recovery may be derailed by the sharp rise in oil prices, the FTSE 100 Index lost some of Tuesday’s late rally to stand 32.1 points lower at 5964.5.
In events closer to home, the pound rose against the dollar and euro after minutes showed a third member of the Bank of England’s rate-setting committee voted for a hike in borrowing costs earlier this month.
The other six members, including Bank governor Mervyn King, voted in favour of no-change but economists said the report fuelled speculation that rates could rise in May. Sterling reached an annual high against the dollar at 1.62.
Commodity-based stocks were impacted by the uncertainty in Libya as Kazakhmys dropped 28.5p to 1419.5p, Lonmin fell 34p to 1793p and Antofagasta declined 31p to 1352p.
Rexam delivered the biggest fall in the FTSE 100 Index despite detailing a 45% rise in annual underlying profits to £412 million for 2010. The figures were ahead of market expectations but with Rexam’s shares enjoying a strong run in recent weeks the stock fell back 3% or 12.2p to 357.8p.
The UK’s part-nationalised banks featured on the risers board ahead of results later in the week. Lloyds Banking Group, which is expected to report annual profits of £2 billion on Friday, rose 0.9p to 67.2p, while Royal Bank of Scotland added 0.4p to 48.1p on the eve of its figures on Thursday.
In the FTSE 250 Index, shares in Cable & Wireless Communications jumped 8% – up 4p to 50.4p – after the company announced plans to sell its operating business in Bermuda and return cash to shareholders.
Builders’ merchant and Wickes owner Travis Perkins rose 2% after it revealed a 20% rise in underlying profits and said the new financial year had started well. However, the share price improvement failed to stick and the Northampton-based company was later flat at 1039p.