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Tullow weighs on FTSE as well comes up dry

Equity markets gloomy and commodity prices fall as a solution to prevent a ‘fiscal cliff’ in the US remains elusive.

 
Tullow weighs on FTSE as well comes up dry

16:30 Update: Tullow Oil was the biggest loser on the FTSE 100 on Tuesday afternoon after the company told investors that it hadn't struck oil in a well offshore French Guiana.

‘The well, drilled 5km up-dip from the Zaedyus-1 well, encountered a total of 85 metres of reservoir quality sands with oil shows in several objectives but did not encounter commercial hydrocarbons at this location,’ the company said, precipitating a share price drop of nearly 6% to 1291p.

Tullow (TLW.L) exploration director Angus McCoss said the French Guiana block ‘still offer excellent potential for multiple exploration successes’.

Wider markets were gloomy as a solution to prevent a ‘fiscal cliff’ remained elusive in the US. The FTSE 100 lost its earlier gains and was trading a smidgeon lower at 5869, while Wall Street opened marginally lower in the absence of any big US economic data releases.

Commodities were also trading lower as investors fretted over the economic implications of US spending cuts and tax rises. Brent crude oil futures dropped by 1% to $109 and the gold price slipped another 1.2%, continuing the week’s downward trajectory, to $1,696

09:29: FTSE inches ahead; TUI Travel profit jumps 8%

Britain’s markets made modest gains in early Tuesday trade as eurogroup ministers approved a €39.5 billion (£31 billion) bailout for Spanish banks overnight and US fiscal cliff negotiations continue.

The benchmark UK index of blue-chip shares added 0.04%, or 2 points, to 5,873 and the Mid-250 index gained 0.06%, or 7 points, to 12,035.

Eurogroup ministers approved aid for Spanish banks to be released next week on the condition of over 6,000 job cuts and bank branch closures across the country.

TUI Travel (TT.L) gained 7p, or 2.6%, to 275p as it posted an 8% jump in full-year profit. The group which owns First Choice and Thompson said poor weather over the summer in the UK, Germany and Nordic countries drove growth, though its French business continued to under perform.

Van rental group Northgate (NTG.L) dropped 14p, or 5.3%, to 252p as its first half profits fell 13%, due to a drop in vehicles hired and competitive rates. The company has also been downsizing its fleet and selling vehicles as part of cost-saving measures. Analysts at Pamure Gordon cut their rating on the stock from ‘hold’ to ‘sell’ with a target price of 230p following the results.

Schroders (SDRt.L) took on 20p, or 1.5%, to £13.28, rising on markets for the second day running as Bank of America upgraded the group from ‘neutral’ to a ‘buy’ due to the improving outlook for greater investor appetite.

Plumbing services group Wolseley (WOS.L) shed 29p, or 1.05%, to £28.33 at the bottom of the FTSE 100 as its revenues in Europe continued to come under pressure in the last six months. The group is carrying out a strategic review into operations in France, though pre-tax profits jumped 7.6% in the first half as growth came from its US and Canadian markets.

AMEC (AMEC.L) added 6p, or 0.5%, to £10.59 as it was awarded a $528 million (£327 million) refinery management contract in Kuwait. It also won a contract with Talisman Energy’s brownfield operations in the North Sea.

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