Britain's top share index fell back from opening gains on Thursday, headed by weakness in energy stocks as heavyweight Royal Dutch Shell took a battering on worries over a possible oil spill in the Gulf of Mexico.
Royal Dutch Shell shed 3.5 percent after an oil sheen spotted near one of the firm's platforms in the central Gulf of Mexico caused the company to send a spill response vessel and seek aircraft overflights, a Shell spokeswoman said.
Traders said the knee-jerk response by Shell's share price reflected concerns that any possible Gulf of Mexco spill might be compared to BP's Deepwater Horizon rig disaster in 2010.
BP itself was down 1.0 percent. The firm will run the gauntlet of protests from environmentalists and investors alike at its annual shareholder meeting on Thursday where it will make the latest in a series of attempts to put the Gulf of Mexico oil spill behind it.
“The falls by the heavyweight oils has soured the tentative recovery following Tuesday's sharp falls, although strength in the miners is helping to keep the FTSE fairly steady,” said Richard Hunter, head of UK equities at Hargreaves Lansdown.
At 10:15 SA time, the FTSE 100 index was down 5.17 points, or 0.1 percent, at 5,629.57, having rallied 0.7 percent on Wednesday following a 2.3 percent drop in the previous session.
Among other big blue chip fallers, United Utilities fell 1.2 percent as Citigroup downgraded its rating to “neutral” in a review of the UK water sector, citing valuation grounds after strong outperformance in 2010/11.
Citigroup has also downgraded its overall stance on UK equities to “neutral” from “overweight”, putting it on the same rating as the rest of Europe.
“Weak Eurozone economies and ongoing austerity measures should remain significant drags on the UK economy over the next 12 months,” Citigroup said in a global strategy review.
Banks fell back after early gains, weighed by falls in global heayweight HSBC down 0.6 percent, with Standard Chartered also off 0.4 percent.
Royal Bank of Scotland , however, bucked the sector trend, adding 1.6 percent to extend Wednesday's rally, fueled by rumours that Arab investors, including Qatar and Abu Dhabi, had bid the British government 30 pence a share for 29 percent of its 81 percent stake in the UK lender, the Daily Mail said.
MINERS SUPPORTIVE
Miners provided the biggest underlying support for the FTSE 100, as the sector extended its recent rally helped by firmer copper prices which rose further above technical support at $8,000 a tonne as worries over the global economic outlook eased.
The Federal Reserve on Wednesday provided a reassuring assessment of the US economy in its latest “Beige Book” summary of national activity, after Friday's data showing a sharp slowdown in US jobs creation in March triggered a sell-off in global markets earlier this week.
On the domestic macro economic front, Britain's global trade deficit widened by more than expected in February, to -8.772 billion pounds, versus a -7.7 billion pounds forecast gap.
US February international trade figures will be released at 14:30 SA time, together with March US producer prices, and the latest weekly initial jobless claims.
Back among some individual blue chip gainers, autos and aerospace parts firm GKN was the top FTSE 100 riser, up 4.8 percent as Credit Suisse upped its rating to “outperform” from “neutral”.
And Aggreko gained 2.7 percent as the world's biggest temporary power provider said underlying revenue had risen by more than 20 percent in the first three months of the year, putting it on track for further growth in 2012.
Separately, the company announced a 100 MW contract in the Dominican Republic valued at about $80 million over two years. - Reuters