Bargain hunters, oil stocks fuel FTSE reboundPosted on Monday, August 22, 2011 - 17:11 pm
By Tricia Wright
LONDON (Reuters) - Strong energy stocks, boosted by hopes for an imminent end to the conflict in Libya, fuelled gains in the top shares on Monday, as investors bought back into equities following recent hefty declines.
Integrated oil stocks <.ftnmx0530> added the most points to the blue chip index, with sentiment surrounding the sector lifted as Muammar Gaddafi's rule appeared to be crumbling.
Royal Dutch Shell
Oil services firms, which traders said could benefit from maintenance work in the country, found support. Petrofac
Midcap peer Lamprell
While its earnings rose 49 percent in the first half of the year on the back of higher refinery margins, the company said it continued to battle delays to regulatory approvals.
The FTSE 100 (FTSE: ^FTSE ) was up 123.55 points, or 2.5 percent, at 5,164.31 by 12:44 p.m., after a torrid week in which it sank 5.2 percent on concerns the global economy could be heading back into recession.
Traders said that bargain hunting was helping to drive the index's gains.
"We did go below 5,000 (near the open) and I think a lot of people have taken the view that it's probably fairly cheap given the range of recent days -- the lowest it's been is around 4,800 and there was a very sharp rebound off that," Michael Hewson, analyst at CMC Markets, said.
Traders said the extreme market turbulence seen lately has benefited inter-dealer broker ICAP
Indeed, midcap spread-betting firm IG Group
Interdealer broker Tullet Prebon
Miners <.ftnmx1770> were also behind the FTSE 100 's gains.
A target price hike from Citigroup also helped, with the broker lifting its gold price forecasts to accommodate the impact global financial tension is having on gold.
"(Randgold) traded at a valuation parity with Fresnillo 12 months ago, but the Ivory Coast problems saw it move to a 35 percent discount. The Ivory Coast issues have been resolved, but it still trades at a 25 percent discount," Citi said in a note.
On the second line, Petropavlovsk
With global growth at the forefront of investors' minds, the meeting of central bankers in Jackson Hole, Wyoming, on Friday will be keenly awaited.
It was at the same meeting last year that Federal Reserve Chairman Ben Bernanke first hinted at a second round of quantitative easing (QE) to help spur the U.S. economy, though it is considered unlikely that he will announce further quantitative easing this time.
"Don't rule out some form of positive message from Jackson Hole even if it isn't additional QE," Peter Dixon, economist at Commerzbank, said.
(Reporting by Tricia Wright; Editing by Jon Loades-Carter)