Author: 
REUTERS
Publication Date: 
Tue, 2011-07-05 23:03

Tullow Oil advanced 2.5 percent after saying it expected record revenues for the first half of 2011 after it ramped up output in Ghana, and that it was a few weeks away from completing a key deal in Uganda.
“Tullow remains a prolifically successful explorer, with a success ratio of 79 percent, and with high impact drilling set for H2 2011 in Guyana, Liberia, Sierra Leone, and Kenya, this will open up new basins and opportunities to extend Tullow’s development base beyond Ghana and Uganda,” Investec Securities said.
Small cap peers also pushed higher, led by Xcite Energy, up 18 percent, after the Treasury said it will increase the level of tax support for North Sea Oil companies to help firms operating in smaller, less profitable oil fields.
Optimism about M&A activity gave investor sentiment a further shot in the arm, with consumer goods firm Reckitt Benckiser in second place on the FTSE 100 leader board on talk the British maker of Cillit Bang cleaners and Nurofen painkillers was a target for US peer Procter & Gamble.
Reckitt had no comment to make on the rumors.
“Procter & Gamble are still pretty challenged and this may be a solution for them,” said Tom Gidley-Kitchin, an analyst at Charles Stanley, adding Reckitt was a first-rate business and would be pretty easy to integrate. Its non-US exposure would be attractive to P&G, which has struggled to grow its overseas business, he said.
US stock index futures pointed to a flat to higher opening on Wall Street ahead of May US factory orders and revised durable goods orders.
Upbeat broker sentiment was behind a number of moves on the FTSE 100 on Tuesday.
An upgrade by Matrix to “buy” helped Marks & Spencer add 1.7 percent ahead of next week’s first-quarter trading update. This came as Bernstein issued a broadly bullish note on food retailers, with Tesco up 0.5 percent, and Wm Morrison 0.8 percent firmer.
Schroders felt the benefit of a UBS upgrade to “buy” on valuation grounds, with the fund manager climbing 1.3 percent, and utilities Severn Trent and United Utilities up 0.4 percent and 0.5 percent respectively as Deutsche Bank repeated “buy” advice on the two stocks.
Intertek Group, however, shed 3.4 percent, the top FTSE 100 faller, as Societe Generale downgraded its recommendation for the testing equipment group to “hold” following a recent meeting.
Domestic data left the FTSE largely unaffected. Britain’s service sector performed better than expected in June but growth was still not strong enough to generate jobs, a purchasing managers’ survey showed.
Taken alongside data in the past week showing a drop in manufacturing growth and a subdued construction sector, the figures suggested Britain’s recovery failed to gain traction in the second quarter.
Investors were however more alert to media reports of a possible interest rate rise in China this weekend and talk of the country’s local debt burden. That gave rise to worries about the impact on demand from the world’s top commodities consumer and mining stocks tracked metals prices lower.
Rio Tinto, off 1.2 percent, and Kazakhmys, 1.1 percent weaker, bore the brunt of the sell-off. Target price cuts across the sector from Deutsche Bank also hampered shares.
Banks recovered from losses on Monday when fresh worries about Greece dented investor confidence in the financial sector.
Royal Bank of Scotland added 1.6 percent and Barclays edged up 0.1 percent.
Analysts said the Greek crisis had largely been relegated to the back burner for now.
“The fact that the authorities have kicked the can down the road, even though it is not a permanent solution, I think it is a legitimate part of muddling through,” said Andrew Bell, chief executive of the 1.15 billion pound Witan Investment Trust.
“With equities at the valuation that they are... time is on the side of the equity investor,” he said — provided, of course, that we do not have another recession, and that the European sovereign debt crisis does not trigger a credit crunch.

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