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Oil surge lifts FTSE after Trump scraps Iran deal

(Update) FTSE 100 advances 1% after US president Trump reimposes sanctions on Iran. Imperial Brands and Provident Financial both rebound on trading statements.

 
Oil surge lifts FTSE after Trump scraps Iran deal

(Update) US president Trump’s decision to abandon a nuclear treaty with Iran pushed crude oil prices 3% higher, boosting shares in oil majors and  propelling stock markets higher on both sides of the Atlantic, despite fears of heightened geopolitical risk in the Middle East.

The FTSE 100 advanced 1% of 78 points to 7,644 with heavyweights BP (BP) - up 3.9% or 21p to 571.7p - and Royal Dutch Shell (RDSb) - up 3.6% or 93p to £27.25.

On Wall Street, the S&P 500 opened higher after gains of over 1% in Exxon (XOM.N) and Chevron (CVX.N) brought on by a further spike in oil prices after Trump said America would re-impose tough sanctions on Iran, the third biggest  oil producer in the Opec cartel.

In Europe the FTSEurofirst 300 added over nine points or 0.6% to 1,537.

Oil prices have steadily risen since last summer and today's 2.9% rise in Nymex light crude to $7.04 a barrel takes it to a three-and-a-half year high.

With Brent crude looking to $80 as its next key target, Ken Odelunga, market analyst at City Index, expressed caution, pointing out that while US sanctions would hurt Iran, China, its single biggest customer of oil, would continue to buy. 'Therefore the impact on oil prices going forward is expected to be far from direct,' he said.

Imperial is smoking

In a day of unexpected revivals in London, Imperial Brands (IMB) was the FTSE’s biggest riser, as poorly performing shares in the tobacco giant jumped over 6% or 163p to £27.82 on better-than-expected half-year results, an upbeat outlook and a 10% increase in the dividend.

‘The market had put Imperial Brands in the dog house until recently, largely due to its perceived lack of heat-not-burn alternative tobacco products. With the blu e-vapour range performing strongly, heat-not-burn products now in late-stage development and signs of improvement in the core tobacco performance, Imperial is finding support once more,’ said Steve Clayton, manager of the HL Select UK Income Shares fund.

Provident perks up

The mid-cap FTSE 250 index provided surprises too. 

Provident Financial (PFG) rallied over 9% or 59p to 701p after the sub-prime lender said its recovery plans were on track and 2018 results would be in line with its internal expectations.

The company was one of the worst performing shares last yar, plunging 70% after two profits warnings, the suspension of its dividend and an investigation by the Financial Conduct Authority.

Renishaw (RSW) had its best day in two years, soaring 13% or 618p to £53.70 after the precision engineering group upped its forecast for full-year revenues to £585-£610 million from £575-£605 million with pre-tax profits expected to be £135-150 million versus £127-147 million previously. It reported good third quarter growth in all areas, especially its metrology unit.

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