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Market Wrap - Midday

Shell drags FTSE lower after oil price fall

08 February 2017 11:52

Weaker oil prices dragged blue-chip colossus Royal Dutch Shell (RDSB) 1.9% lower.

As Shell is the biggest stock on the index, it pushed the FTSE 100 into the red.

Oil was affected by figures from the American Petroleum Institute which showed a 14.2 million barrel build in its crude oil stocks last week compared to an expected increase of only 2.5 million.

West Texas Intermediate crude oil fell 0.6% to $51.84 and Brent crude oil was 0.3% lower at $54.86 per barrel, respectively.

Gold rose 0.2% to $1,236 per ounce and copper was stable at $5,798 per tonne.

The weakness in Shell meant a rally in housebuilders following the UK government's report into the 'broken' housing sector failed to move the index.

Among the winners were Persimmon (PSN), Taylor Wimpey (TW.) and Barratt (BDEV).

Overseas, worldwide markets performed well as the S&P 500 and Dow Jones closed higher on Tuesday.

In Asia, the Hang Seng, Nikkei 225 and SSE Composite indices gained on average 0.5%.

FTSE 100 RISERS AND FALLERS

Gold miner Rio Tinto (RIO) returned to profitability in 2016 as it posted net earnings of $4.6bn against a 2015 loss of $866m. It also unveiled a better than expected dividend to reward investors.

New FTSE 100 stock and packaging firm Smurfit Kappa (SKG) reported 2016 earnings growth despite higher input costs and a currency headwind. The company also hiked its dividend by a fifth.

Property insurer RSA (RSA) agreed a deal to dispose of £834m worth of legacy insurance liabilities in the UK to Enstar Group.

Stockbroker Hargreaves Lansdown (HL.) failed to rally as net new business flows were down 7% in the six months to 31 December (excluding the Jupiter and JPMorgan client acquisitions in the prior year). This overshadowed a 21% advance in pre-tax profit and 10% rise in the dividend as share trading gained momentum after the Brexit vote.

FTSE 250 RISERS AND FALLERS

African oil explorer Tullow Oil (TLW) fell by 5% on lower oil prices and a 19% increase in borrowings revealed in 2016 results. The company said the majority of its cash flow in 2017 would be put towards reducing its $4.8bn debt.

Shares in car insurance business AA (AA.) were flat despite a small increase in its paid members as trading was in line with expectations.

Beds and curtains pusher Dunelm (DNLM) announced 'softer than expected' trading due to a weaker market and supply chain disruption in the six months to 31 December. The disappointing trading hit pre-tax profit by 26%.

Engineer WS Atkins (ATK) traded in line with expectations over the last four months and its outlook remained unchanged. The good news reassured the market as challenging conditions remained in the Middle East.

Sophos (SOPH), which aims to protect users against phishing emails, agreed to acquire the commercial software products business of Invincea for $100m, plus $20m in extra payments.

Polymer manufacturer Victrex (VCT) declined 2.6% as revenue was flat in the first quarter of 2017 and polymer volumes fell by 6% to 810 tonnes.

SMALL CAP RISERS AND FALLERS

Investors were feeling cold after smart boilers supplier Flowgroup (FLOW) reported it plans to sell its Flow Energy business. The firm said it would help fund the launch of its microCHP technology in Europe.

Versarien (VRS) was the biggest small cap riser following the launch of its graphene brand, Nanene, which can be used in carbon fibre composites. The stock soared 38% to 16.1p.

Blur Group (BLUR), which helps businesses save on goods and services, gained 12.4% to 8.3p as it says 2016 earnings will be ahead of expectations.

Mineral processing tech firm Alexander Mining (AXM) raised £750,000 in a discounted placing for a 'potential strategic mining corporate investment opportunity.'

Story provided by StockMarketWire.com

Related Company: RDSB

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