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UK Equities
Petrofac leads London’s oil sector lower
From the Financial Times of Fri, 12 Dec 2014 11:09:57 GMT

Stocks in London and across Europe were sharply lower on Friday as oil prices dominated global market sentiment once again, with Petrofac, the oilfield services group, falling the most on the FTSE 100.

Petrofac, which delivers pipeline services and maintains oil rigs, fell 4.6 per cent to 690.5p. In a review of the sector, Deutsche Bank lowered its price target on Petrofac to 800p from £10.50.

“A severe recession in oilfield services earnings is already discounted in the shares,” said analyst Sebastian Yoshida. “However, while we are closer to the bottom than the top we see uncertainties around the shape and timing of any recovery and think it is too early to turn outright positive on the sector.”

There were sharp losses also for Petrofac’s European rivals. Italy’s Saipem fell 4.7 per cent to €8.27, while Switzerland-listed Transocean shares fell 4.3 per cent to SFr16.56.

Deutsche Bank concluded that with the oil price backdrop looking set to remain weak into 2015, it expected no strong rebound in capital expenditure from the oil producers.

“The key risks are oil price volatility and project execution which can be variable by contractor,” said Mr Yoshida.

Overall, London’s FTSE 100 fell 104 points or 1.6 per cent to 6,357.48, while the pan-European FTSE Eurofirst 300 lost 1.6 per cent to 1,336.22.

While Greek stocks took a breather from recent losses, some shares in London and Europe with exposure to Greece and its growing political storm were hard hit. The FTSE 100-listed shares in Coca-Cola’s Hellenic Bottling Company fell 2.7 per cent to £12.92.

Financial stocks were hit in London, with lingering concerns over annuities keeping insurers under pressure, while fears of rising fund redemptions left the asset management sector lower.

Hargreaves Lansdown fell 3.6 per cent to 918.5p, while Friends Life lost 2.2 per cent to 359p.



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