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Oil stocks thrust London shares to positive 2023 start

by uma

By Shashwat Chauhan

(Reuters) – UK’s exporter-heavy FTSE 100 jumped to a seven-month high on Tuesday as oil stocks rallied, with majors Shell and BP putting the broader energy sector on track for its biggest single day jump in six weeks.

The blue chip FTSE 100 rose 2.2%, the more domestically-focussed FTSE 250 midcaps gained 2.0% to a more than three week high, while the energy sub index rose 4%.

The pan-European STOXX 600 continued Monday’s gains, up 1.8%.

“I could see it carrying on for today,” said Giles Coghlan, chief market analyst at HYCM, but warned that the stock rally was not likely to last longer term because a majority of fund managers were “really concerned about stagflation.”

2023 would be a tough year as the main engines of global growth – the United States, Europe and China – all experience weakening activity, the head of the International Monetary Fund said on Sunday.

Data on Tuesday showed China’s factory activity shrank at a sharper pace in December, while in the UK, manufacturers reported one of their sharpest falls in activity since the 2008-09 recession.

The resources heavy FTSE 100 outperformed its local peers last year, gaining 0.9% against a 12.9% drop in the STOXX 600, thanks to an early rally in metals and oil ending its second straight year in the green in 2022.

Cineworld slipped 8.1% after the British cinema operator said it would not sell any of its assets individually, and that it had not held discussions with AMC Entertainment about the sale of any of its theatres.

Rolls-Royce rose 6.1% after Jefferies raised the airplane engine maker to “buy” from “hold”.

 

(Reporting by Shashwat Chauhan in Bengaluru; Editing by Nivedita Bhattacharjee)

 

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