London close: Rising travel and retail stocks offset losses from energy sector

A slight recovery in oil prices wasn't enough to ease the pressure on the energy sector on Friday, though stocks in London erased losses by the end of trade as shares in the travel and retail sectors jumped.

"Clearly firms with a focus on consumer spending will be indirect beneficiaries of increased spending thanks to lower petrol prices," said analyst Chris Beauchamp from IG.

London's FTSE 100, which hit a low of 6,667.08 in morning trade, finished more or less flat, falling just 0.01% to 6,722.62.

A positive, albeit shortened, session on Wall Street was also helping the improvement in sentiment in afternoon trade, with US retailers performing particularly well on hopes that Black Friday sales will be strong.

Brent was trading 0.3% higher at $72.76 a barrel by the close after dropping by as much as 7% on Thursday, its worst one-day slide in three years, after the Organization of Petroleum Exporting Countries decided not to scale back production.

OPEC held on to its output ceiling of 30m barrels per day despite calls to reduce output amid a supply glut.

Brent, which is still set to close the week down 9% at a four-year low, could drop as low as $60 per barrel, analysts said.

Analysts said that OPEC's move is also likely to raise the pressure on central banks across the globe currently battling against deflation, such as those in Japan and Europe.

Figures from both Japan and the Eurozone on Friday showed that inflation in both regions slowed further. After adjusted for the recent sales-tax hike, Japanese inflation fell to a 14-month low of 0.9% in October, while Eurozone inflation eased to just 0.3% in November.

Energy stocks drop, but retailers and travel shares rise

Tullow Oil and BG Group both finished around 8% on the back of Thursday's slide in crude. BHP Billiton, Petrofac, BP and Shell also finished with heavy losses on the FTSE 100.

FTSE 250 peers Premier Oil, Ophir Energy, Enquest and Afren were registering greater losses amid concerns that smaller firms may not have the scale to mitigate the impact of depressed crude prices for too long.

Meanwhile, energy services stocks were also under pressure, such as Petrofac, Weir Group, Hunting, Wood Group and Amec Foster Wheeler, on the back of fears that developers may scale back their spending budgets.

In contrast, hopes that lower oil prices may boost consumer spending were giving retailers a lift with Kingfisher, Sports Direct, M&S and AO World on the rise. Optimism surrounding Black Friday sales also helped retail stocks in London.

Meanwhile, expectations of lower fuel costs were supporting travel stocks, such as Carnival, TUI Travel and Easyjet.

Market Movers
techMARK 2,947.64 +0.38%
FTSE 100 6,722.62 -0.01%
FTSE 250 15,851.76 -0.24%

FTSE 100 - Risers
Carnival (CCL) 2,820.00p +4.56%
Kingfisher (KGF) 312.00p +3.41%
St James's Place (STJ) 794.00p +3.12%
Vodafone Group (VOD) 233.95p +2.90%
TUI Travel (TT.) 444.70p +2.63%
Sports Direct International (SPD) 660.50p +2.56%
Imperial Tobacco Group (IMT) 2,960.00p +2.46%
Compass Group (CPG) 1,090.00p +2.44%
Diageo (DGE) 1,981.00p +2.43%
Sage Group (SGE) 407.10p +1.55%

FTSE 100 - Fallers
BG Group (BG.) 900.20p -8.77%
Tullow Oil (TLW) 426.00p -8.37%
Weir Group (WEIR) 1,876.00p -4.29%
BHP Billiton (BLT) 1,517.00p -3.19%
Intertek Group (ITRK) 2,335.00p -2.99%
Fresnillo (FRES) 712.00p -2.60%
Aggreko (AGK) 1,533.00p -2.42%
Anglo American (AAL) 1,321.50p -2.26%
Ashtead Group (AHT) 1,054.00p -2.23%
Petrofac Ltd. (PFC) 825.00p -2.19%

FTSE 250 - Risers
AO World (AO.) 249.80p +7.21%
Pennon Group (PNN) 894.50p +5.61%
Just Retirement Group (JRG) 138.00p +4.23%
Wetherspoon (J.D.) (JDW) 819.00p +4.07%
SSP Group (SSPG) 264.30p +3.65%
TalkTalk Telecom Group (TALK) 312.30p +3.41%
Entertainment One Limited (ETO) 299.50p +3.38%
Merlin Entertainments (MERL) 379.00p +3.35%
Cineworld Group (CINE) 382.50p +3.35%
Home Retail Group (HOME) 200.40p +3.09%

FTSE 250 - Fallers
EnQuest (ENQ) 49.57p -14.90%
Premier Oil (PMO) 187.00p -13.43%
Afren (AFR) 51.75p -11.16%
Hunting (HTG) 576.00p -8.06%
Ophir Energy (OPHR) 145.30p -7.98%
Rotork (ROR) 2,201.00p -7.87%
Wood Group (John) (WG.) 591.50p -7.58%
Fenner (FENR) 238.50p -7.52%
Vedanta Resources (VED) 729.50p -7.42%
Elementis (ELM) 255.20p -6.83%