By Sruthi Shankar
(Reuters) – UK’s FTSE 100 rose on Tuesday as bumper earnings from oil giant BP and a rally in energy stocks helped counter investor worries that the Federal Reserve will keep interest rates higher for longer.
The blue-chip FTSE 100 rose 0.5%, inching closer to the all-time high it hit last week.
European stocks posted small gains after a weak opening as investors digested mixed earnings reports and data signalling resilience in the U.S. economy, which could offer more room for the Fed to keep hiking interest rates.
BP rose 3.7% after it reported a record profit of $28 billion in 2022 and increased its dividend by 10%, in a sign of confidence as it scaled back plans to reduce oil and gas output by 2030.
The stock was the top gainer on FTSE 100, set for its biggest percentage gain in 11 weeks.
“The company today suggests that by the end of the decade, the group could be earning EBITDA of $51 billion-$56 billion, with annualised growth of 12% in the next three years,” said Steve Clayton, fund manager at Hargreaves Lansdown. “If BP are right, this is a pretty unprecedented period of sustained high financial returns.”
The wider oil & gas index jumped 1.8% as crude prices rallied nearly 2% on optimism over recovering demand in China and concerns over supply shortages following the shutdown of a major export terminal due to earthquakes in Turkey. [O/R]
While a surge in commodity prices and a weaker pound have supported the FTSE 100, worries about Britain’s gloomy economic outlook and elevated inflation have weighed on the domestically focussed FTSE 250 index.
The midcap index fell 0.3%, with Morgan Advanced Materials Plc slumping 4.7% after the industrial firm gave downbeat earnings forecast following a cyber security incident reported in January.
International Distributions Services rose 0.7% after postal workers at its unit Royal Mail called off a planned 24-hour strike over pay next week.
(Reporting by Sruthi Shankar in Bengaluru; editing by Uttaresh.V and Janane Venkatraman)