BUYERS returned to BP as a leading stockbroker abandoned its bearish stance on the troubled oil major.
The £120 billion company has had a torrid five weeks, marked by the revelation of delays to its Thunder Horse platform in the US Gulf of Mexico, confirmation of the succession of Lord Browne of Madingley, chief executive, and, most prominently, the shutdown of its Prudhoe Bay field in Alaska because of pipeline corrosion. But with BP’s shares having fallen 5 per cent since July 11 — during which time it has lost its place to Shell as Britain’s biggest company — Goldman Sachs yesterday dropped its “sell” advice in favour of a “neutral” recommendation, citing 9 per cent potential upside to its 12-month 665p target. BP rose 5p to 614p.
The FTSE 100 came to rest a modest 3.0 ahead at 5,903.4.
The mining sector initially gained ground as a complete shutdown at Chile’s Escondida copper mine after 11 days of reduced output by strike action sent metals prices higher. However, profit-takers moved in after China’s decision to raise interest rates for the second time this year, a cooling measure that is expected to trim demand for raw materials. Kazakhmys faded 29p to £12.09, with Rio Tinto off 60p at £27.22 and Anglo American down 51p to £23.69.
BAT firmed 5p to £14.51 on relief at Thursday’s ruling by a US federal judge, which found that cigarette makers had violated anti-racketeering laws but stopped short of forcing the industry into heavy funding of anti-smoking efforts.
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InterContinental Hotels Group rose 24½p to 905p amid optimism that Tuesday’s first-half figures from the Crowne Plaza and Holiday Inn owner, recently unsettled by terror threats and fears of a US consumer slowdown, will reassure.
PartyGaming gave up 2½p to 111p on a downgrade from “buy” to “hold” from ABN Amro. The Dutch broker welcomed last month’s acquisition of Gamebookers — which has prompted it to raise its 2007 and 2008 earnings forecasts by 4 per cent — but has reduced its price target for the online poker operator from 160p to 100p. Michael Pacitti, analyst, cited the effects of a weaker US dollar and the belief that investors will be unwilling in the short term to fully discount future growth prospects until the regulatory situation in the US becomes much clearer.
Marks & Spencer firmed 1½p to 590p on a repeated “overweight” recommendation from Lehman Brothers. After visiting the retailer’s newly refitted 70,000 sq ft store in Kensington, West London, the US broker is convinced that product improvements coupled with the makeover will continue to drive strong growth in like-for-like sales. Royal & SunAlliance added ½p to 132½p as Morgan Stanley placed a block of 17.3 million shares at 132p.
Man Group shed 4p to 421½p as Dugald Eadie, the former Henderson managing director who now serves as a non-executive, declared the sale of 21,000 shares at 424½p. SABMiller dropped 21p to £10.19 on the disclosure that André Parker, managing director of the brewer’s African and Asian operations, has sold 11,184 shares at £10.71½.