By Sarah Turner
LONDON (Dow Jones)--Most oil and gas firms advanced in a flat
London market on Wednesday with BP shares higher after the firm
said it has made a major oil discovery in the Gulf of Mexico.
BP (BP) said it drilled to one of the deepest depths ever in the
oil and gas industry as it touted a "giant" discovery off the coast
of Texas, while adding that it has yet to assess the amount of oil
available there. The stock rose 4.3%.
At the Tiber prospect, BP said it drilled to a total depth of
roughly 35,000 feet to reach the oil. The site is 250 miles
southeast of Houston in 4,132 feet of water.
Other oil and gas firms on the move included natural-gas
producer BG Group , up 1.8%, and Royal Dutch Shell (RDSA), up
1.1%.
The move in the oil and gas sector helped to offset weak
financial and mining stocks, allowing the FTSE 100 index to close
virtually unchanged at 4,817.55.
The index finished down 1.8% on Tuesday.
Other European shares ended on Wednesday. U.S. stocks turned
higher mid-morning.
Banks were some of the worst performers in London, with shares
of Royal Bank of Scotland down 4%, shares of Lloyds Banking Group
(LYG) down 6.2% and Barclays (BCS) shares down 3%.
Metal extractors were also lower, with Rio Tinto (RTP) shares
down 0.8% and Antofagasta shares down 3.3%.
Both sectors have rallied sharply since shares in the U.K. hit
multi-year lows in March as investors hoped the economic backdrop
was set to improve.
On Wednesday investors were buying up some stocks that are
normally regarded as safe-haven places for investors to put their
money, such as food retailers and tobacco firms.
Shares of supermarket group William Morrison rose 3.6% and Tesco
shares were up 1%.
Merrill Lynch analysts said that they rate both firms at
buy.
"Inelasticity of demand and concerns of falling food inflation
have weighed on the food retailers' share performance. This looks a
little overdone with the sector trading slightly below its long-run
market-relative rating," the analysts said.
It reinstated coverage on 10 general retail stocks in Europe,
also rating Home Retail , Kingfisher and Next at buy.
"We think there is a margin story as surplus capacity and
retailer flexibility has reduced the dollar sourcing drag; and as
cost-cutting, lower rent costs and extra volume have leveraged
profit and loss accounts," the broker said.
Home Retail shares rose 0.6%, Kingfisher shares climbed 0.8% and
Next shares were up 1.4%.
DSG International shares climbed 2.7% outside the top index.
On Wednesday, the firm posted a 6% drop in 16-week comparable
sales, although it said that this was a better result than analysts
had been expecting.
Margins increased 0.7% year-on-year, the firm added.
-Sarah Turner; 415-439-6400; AskNewswires@dowjones.com