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Europe: Oil majors give FTSE 100 a boost, Next shines


[LONDON] Britain's top share index edged up on Tuesday thanks to a surge in oil majors as crude prices hit a four-year high, while retailer Next stole the spotlight after a strong update confounded expectations.

The FTSE 100 ended up 0.66 per cent, with energy stocks and miners contributing the most to the rise.

Next shares jumped 7.7 per cent to the top of the FTSE 100 after it raised its full-year profit forecast and struck an optimistic tone on a no-deal Brexit, saying it is well prepared for the eventuality.

"It is still too early to measure whether Next is gaining share as a result of retrenchment by other mid-market apparel retailers, although we expect this to be a growing feature in the medium term," said UBS analysts.

Heavyweight oil majors Royal Dutch Shell and BP delivered the lion's share of gains.

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They rose as crude prices hit a four-year high amid looming US sanctions against Iran and an apparent reluctance by Opec and Russia to raise output to offset the expected hit to supply.

Glencore shares rose 3.5 per cent after the miner launched an additional US$1 billion share buyback, increasing the size of an existing buyback programme.

Overall investors were sanguine, saying strong earnings were supporting markets globally.

"At the end of the day what you need is earnings growth as the driver of market returns," said Mark Hargraves, head of global strategies at AXA Investment Managers.

"What you would really need in order to dislocate things would be earnings to come down by 20 or 25 percent, and for that you need the economy to hit a proper speedbump. There doesn't seem to be any reason to see that right now."

There were some sharp moves in the mid and small-cap space.

Shares in Thomas Cook bounced back, up 6.8 percent, having fallen as much as 23 per cent on Monday after a profit warning.

Among small-caps, CMC Markets shares fell sharply, down 10.9 per cent, after the spreadbetting group said low market volatility and regulatory constraints had weighed on client trading activity, reducing its 2019 income more than previously expected.

Morgan Stanley analysts said they expected a more than 20 per cent downgrade to consensus 2019 profit.

"Beyond full-year 2019, the lower start point and regulatory uncertainty we expect will drive further downgrades and caution," they wrote.

Low & Bonar shares sank 19.5 per cent after the construction materials maker warned on profit.

Hotel Chocolat shares climbed 1.8 per cent after the chocolate retailer reported a stronger annual profit and said it was looking to expand into new markets.


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