Market Report: Falklands factor gets the City excited

Scouring for oil in the Falkland Islands has been controversial considering Argentina has been agitating to control the islands, but yesterday consolidation among the explorers piqued the interest of the City.

Falklands Oil and Gas has bought smaller rival and fellow Aim-listed explorer Desire Petroleum in a £61m deal and simultaneously announced licensing deals with mid-cap peer Premier Oil and fellow Aim-dweller Rockhopper Exploration.

The activity in the Atlantic islands was welcomed by investors and the City who like the look of a company with lots of cash and a bigger portfolio.

The deal will see the new entity owned 60 per cent by Falkland Oil and 40 per cent by Desire shareholders.

Oriel Securities said it is a good deal because it has "broadened the portfolio around the Falklands while preserving cash" – the deal creates access to five exploration wells and will put £170m in cash on the balance sheet.

Scribblers at Jefferies, the broker advising Falkland Oil, said the deal enables "the execution of an enhanced drilling programme" and Desire Petroleum gushed 4p to 16.25p.

Falkland slipped 0.75p to 27.75p. Rockhopper jetted 2.25p to 130.25p but Premier Oil dipped 0.8p to 331.3p.

Over on the main market bargain hunting after four days of falls helped keep the blue-chip index in positive territory for the first time in a week.

The FTSE 100 added 11.54 points to 6,449.04. Good UK services-sector data helped but the US government shutdown kept traders cautious.

One of the stocks at the top of the benchmark table was BP after it won a legal battle connected to its oil spill in the Gulf of Mexico and shot up 4.85p to 437.15p.

Signs of a slowdown in emerging markets and global currency fluctuations will be hard to swallow for the world's second-biggest brewer, SAB Miller Credit Suisse has warned.

The maker of Italian lager Peroni has been focused on growth in Latin America, Africa and Asia Pacific as the UK and Europe gets tougher. But news this week that consumer-goods giant Unilever is finding it tough in emerging markets has led analysts to worry about the outlook for SAB.

Credit Suisse analysts downgraded the group to neutral from outperform and said it is concerned that currency swings experienced by the global consumer products specialists will be difficult for SAB to pass on to customers. They cut their target price to 3,250p and said they now prefer rival Carlsberg. Investors couldn't stomach the stock and it fell 45p to 2,990.5p.

Construction group Carillion said it will take a £40m charge to restructure its energy-services arm after a government u-turn on an energy scheme. It dropped 5.2p to 310.5p.

The trading update from healthcare group BTG was in line with expectations but investors await the US Food and Drug Administration's decision date in December for its Varisolve varicose vein treatment. It was 2.6p better at 383.1p.

Fashion brand Ted Baker reported a 30.2 per cent jump in total half-year sales and pre-tax profit was up by 24.3 per cent to £11.6m. Shares – which have risen more than 65 per cent since January – were 69p weaker at 1,851p. But analysts at Canaccord Genuity said that although its results "came in below our lofty expectations as the company invests in developing its presence in new territories, the core retail business remains in very good health with opportunities online and overseas ahead. With no upgrades this morning, any potential weakness in the shares we think represents an opportunity". They rated it a buy.

Aim-listed Aureus Mining will raise £9.9m to add to the $100m (£61.8m) raised last month to fund construction of its New Liberty gold mine in Liberia. It declined 0.25p to 32.25p.

Fabergé owner Gemfields, which has hired actress Mila Kunis as its brand ambassador, reported disappointing, full-year results and lost 1.75p to 24.25p due to fewer auctions of its gemstones than the previous year.

Europa Oil & Gas has renewed its Béarn des Gaves permit onshore France and spurted 0.625p to 8.62p.

Cancer-medicine specialist Valirx will start a clinical trial at University College London Hospital with prostate-cancer patients. It picked up 0.05p to 044p.