By Amal S and Shashank Nayar
(Reuters) -London’s FTSE 100 edged higher on Tuesday, aided by strong gains in energy stocks as oil prices jumped after Britain and the United States announced Russian crude import bans, while insurer and asset manager M&G was the top index gainer on a share buyback programme.
The blue-chip FTSE 100 rose 0.1%, with Shell and BP the top boosts to the index.
Britain will phase out Russian imports of oil and oil products by the end of 2022, business minister Kwasi Kwarteng said. Separately, the United States, the world’s biggest oil consumer, announced a ban on Russian oil imports.
Joining the corporate exodus from Russia, Shell stopped buying Russian crude and said it would phase out its involvement in all Russian hydrocarbons from oil to natural gas over Ukraine, becoming one of the first major Western oil companies to abandon Russia entirely.
“As worries about the squeeze in supply of oil continue, the elevated price of crude should keep Shell on the path of slicing big chunks off net debt and fund capital expenditure in new gas field expansion and into low carbon alternatives like hydrogen,” said Susannah Streeter, senior analyst at Hargreaves Lansdown.
The FTSE 100 has dropped 5.7% so far this year, the least among developed markets in Europe and the U.S. primarily on support from strong oil stocks. However, the surge in energy prices has raised inflation and economic growth fears. [O/R]
Energy stocks rose 3.5%, a day after recording their best session since January 2021 and is the top gaining UK sub-index so far this year, up 21.7%.
In Britain, the Resolution Foundation think tank estimated the conflict would lead to wider inflation, shaving 4% off the real level of typical household incomes over the coming year, the sharpest fall in nearly half a century.
The domestically focused mid-cap index gained 0.3%, rebounding from the low levels in the prior session that were last seen in November 2020.
“Its probably just a rebound on the basis of we haven’t seen another devastating headline in a brief period of time which is allowing some kind of a minor relief rally,” said Craig Erlam, a senior market analyst at Oanda.
Among individual stocks, M&G gained 15.0% after the insurer and asset manager said it would offer shareholders a 500 million pound ($654.30 million) buyback programme.
Britain’s baker and fast food chain Greggs fell 3.4% after it warned the surging cost of raw materials, energy and staff would limit any material profit growth in 2022.
(Reporting by Amal S in Bengaluru; Editing by Anil D’Silva, Krishna Chandra Eluri and Jane Merriman)
