Newspaper article The Evening Standard (London, England)

MARKETROUND-UP BG Revives on Oil Price Rise and Dresdners Lift

Newspaper article The Evening Standard (London, England)

MARKETROUND-UP BG Revives on Oil Price Rise and Dresdners Lift

Article excerpt


SHARES of BG Group blazed a trail today on the back of rising oil pricesand a brokers upgrade. The oil and gas explorer led blue-chips higher with arise of 20p to 770p as more than 14 million of its shares changed hands.

As the price of North Sea Brent crude rose again, following yesterdays jump,Dresdner Kleinwort raised its rating on BG from hold to buy with an 875ptarget. The move reflects the firms strong exploration prospects, and comes asrecent underperformance makes a takeover bid more credible.

News from Petrobas that the Tupi Sul well off Brazil, in which BG holds a 25%stake, has successfully tested also justifies a more bullish stance on BG, thebroker adds.

The current rise in the oil price has helped focus on valuations at BG, whichalready boasts huge reserves. The shares are trading well below their best,having struck a record 877p last month.

Investors generally were quick out of the traps, supported by several largeprogramme trades, but the early gains were frittered away. The FTSE 100 indexsaw its lead cut from 75 points to 32.2 at 6164.4.

A sharp drop in the Dow future and news that the Bank of England had againdipped into its emergency contingency pot raised fresh fears about the falloutfrom the subprime lending collapse.

The story in the market is that the Bank has lent [pounds sterling]1.6 billion to freeliquidity for a single hard-pressed bank. That is in addition to the [pounds sterling]314million doled out to Barclays, down 12p at 588p on turnover of 75 millionshares, last week.

The US Federal Reserve today pumped another $10 billion ([pounds sterling]4.98 billion) intothe system amid talk that a major American bank was struggling to meet itscommitments. That left the Dow nursing a loss of 51.90 at 13,237.40 after being104 points down at the outset.

At the back of most peoples minds is the belief that there is still morefallout to come from the sub-prime lending collapse, said one trader.

Meanwhile, the sale by Royal Bank of Scotland of Southern Water has generatedfresh interest in the utilities sector. …

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