Oil stocks fuel gains on FTSE

London equities were higher in afternoon trade on Thursday, with momentum coming from the the heavily-weighted oil sector as the prospect of $100 crude prices moved closer.

The FTSE 100 turned 0.4 per cent higher to 6,442.5 in afternoon trade, a rise of 26 points helped by positive trading on Wall Street after as the US private sector jobs market showed a modest increase. In early New York trade, the S&P 500 rose 0.3 per cent to 1,452.1 whilst the Dow Jones Industrial Average was 0.3 per cent higher at 13,085.3.

The Institute for Supply Management's survey into US manufacturing activity surprised investors who had expecting a steady reading, and helped send the Dow Jones Industrial Average to its worst ever start to a New Year, losing 220 points to 13,043.96.

But after a single, small deal from an independent trader sent crude prices briefly over the $100 a barrel for the first time, the outlook for continued strength in oil prices during 2008 boosted resource stocks. In early London trading crude prices stood at $99.34 a barrel.

Tullow Oil topped the FTSE 100 with a 2.2 per cent advance to 659p, Royal Dutch Shell rose 0.7 per cent to £21.12 and BP was 1.1 per cent higher at 622½p. Cairn Energy was 0.4 per cent stronger at £29.64.

Retail stocks were hit hard by the first bad news from the Christmas trading season.

DSG International, the company behind the Curry's Digital and PC World chains, warned profits would miss forecasts by up to £50m. It blamed poor sales of computer products and offered a more cautious outlook for the rest of the year. Panmure Gordon reduced its price target on the shares to 100p from 125p, but retained its "hold" rating.

Fashion retailer Next fell 2.3per cent to £16.28 after it said like-for-like sales to Christmas Eve fell 3.2 per cent, although it continued its policy of holding price discounts until the new year. The shares fell 2.7 per cent to £16.21.

That had a knock-on effect across the high street. Home Retail Group, the operator of Argos, lost 6.7 per cent to 298.8p, the biggest single faller on the senior index. Kingfisher, owner of the B&Q home improvement brand, lost 3.5 per cent to 141½p. Marks & Spencer, lost 3 per cent to 543½p despite a broker upgrade from Panmure gordon, which raised its stance on the stock to "buy" from "hold".

Man Group, the world's largest-listed hedge fund, lost 2.6 per cent to 545½p after Cazenove reduced its rating on the shares to "in line" from "outperform". The investment bank also reduced its stance on New Star Asset Management and Liontrust Asset Management to "underperform" from "in line". Shares in the companies fell 1.9 per cent to 185½p and 1.4 per cent to 330p respectively.