By Simon Kennedy, MarketWatch
LONDON (MarketWatch) -- British stocks gained on Tuesday, as BP
PLC shares rallied after the oil powerhouse sold more assets, while
hotel and restaurant operator Whitbread PLC posted a disappointing
trading update.
London's benchmark FTSE 100 index rose 0.5% to close at
5,891.21, driven by 3.3% surge for heavyweight BP (BP).
Other European markets also gained, posting seven consecutive
winning sessions.
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 0.3% and Royal
Dutch Shell PLC (RDSA) gained 1.1%.
Mining stocks were mostly lower, with Rio Tinto PLC (RIO)
dropping 0.9%, Lonmin PLC falling 1.1% and Kazakhmys PLC down 0.7%
as investors took profits.
Manoj Ladwa, senior trader at ETX Capital, said volumes were
low, but that the money flow seemed to be headed to more defensive
sectors such as tobacco, pharmaceutical and utility stocks.
Shares in Imperial Tobacco Group PLC rose 1% and drug maker
AstraZeneca PLC (AZN) climbed 1.8%.
Shares of hotel and restaurant group Whitbread dropped 2.8%. 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 1.8% 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.