By Simon Kennedy, MarketWatch
LONDON (MarketWatch) -- Gains for BP PLC and other oil majors
helped offset losses for mining stocks in London trading Tuesday,
while hotel and restaurant operator Whitbread PLC fell after a
disappointing trading update.
The benchmark FTSE 100 index edged up 0.2% to 5,870, driven by a
2.4% rise for heavyweight BP (BP).
Other European markets were mostly lower after six consecutive
winning sessions for the Continent's stock markets.
BP's rise came as Credit Suisse lifted its 2011 oil-price target
and named the oil giant as its top long-term pick in the sector on
the basis that markets have become too pessimistic about the
eventual costs of the Macondo oil spill.
BP, meanwhile, announced it has agreed to sell almost all of its
exploration and production assets in Pakistan to United Energy
Group for $775 million in cash.
Credit Suisse said it has lifted its earnings per share
forecasts for European and U.S. oil companies by 23% for 2011 and
10% for 2012 to reflect growing demand.
"Global oil demand has not only recovered, but grew a slightly
astonishing 3.3 million barrels a day in the third quarter,"
analyst Edward Westlake said in a note to clients.
Among other oil and gas stocks, BG Group PLC rose 0.5% and Royal
Dutch Shell PLC (RDSA) gained 0.6%.
Smaller exploration and production group JKX Oil & Gas PLC
rose 1.6% after the initial tests on a Ukraine well exceeded the
firm's expectations.
Mining stocks were mostly lower, with Rio Tinto PLC (RIO)
dropping 1% and Lonmin PLC falling 1.9% as investors took
profits.
Xstrata PLC bucked the trend, rising 0.4% after UBS upgraded the
company to buy from neutral.
Shares of hotel and restaurant group Whitbread dropped 3.1%. The
group reported a 31% jump in sales at its Costa Coffee chain, but a
more muted 1.3% rise across its restaurants.
Panmure Gordon cut its rating on the company to hold from buy
after the statement, saying earnings expectations are unlikely to
rise given what seems to have been a tough start to the fiscal
fourth quarter during the recent bad weather.
Among smaller companies, Carpetright PLC dropped 4.3% after the
flooring retailer reported a 28% drop in underlying six-month
profit.
In economic news, the U.K.'s annual consumer price inflation
rose to 3.3% in November from 3.2% in October, remaining well above
the Bank of England's 2% target rate.