Shell and BP were leading the FTSE 100 higher early Wednesday, as the intensifying battles in Ukraine pushed oil prices above $110 a barrel.
Heavy fighting was reported overnight into Wednesday in eastern and southern Ukraine as Russian forces pushed forward into day seven of their invasion of their western neighbour, according to Ukrainian media reports.
Reports from the eastern city of Kharkiv, Ukraine's second-largest, said that Russian forces attacked a military medical centre. The UNIAN news agency reported that they engaged Ukrainian forces, which managed to take six new Russian 5-80BWM tanks.
Russian airborne forces landed in Kharkiv and triggered immediate clashes in the streets, following Moscow's relentless air assault across the ex-Soviet state.
The FTSE 100 index was up 50.50 points, or 0.7%, at 7,380.70 early Wednesday. The mid-cap FTSE 250 index was up 134.90 points, or 0.7%, at 20,638.33. The AIM All-Share index was up 5.15 points, or 0.5%, at 1,032.42.
The Cboe UK 100 index was up 0.7% at 734.24. The Cboe 250 was up 0.6% at 18,312.49, and the Cboe Small Companies up 0.2% at 14,611.88.
In mainland Europe, the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt was 0.4% lower.
‘While most European bourses are in the red, FTSE 100 once again is the best performer, thanks to its favourable leaning towards energy and mining,’ said Victoria Scholar, head of Investment at interactive investor.
In the FTSE 100, Persimmon was up 6.8% after the housebuilder said its performance was strong in 2021. It delivered more homes and said it had strengthened its platform for future growth.
For 2021, pretax profit was £966.8 million, up from £783.8 million in 2020 on revenue of £3.61 billion, up from £3.33 billion.
The York, England-based housebuilder completed 14,551 new homes in 2021, almost a 1,000 more than 13,575 homes in 2020. The average selling price was £237,078, up from £230,534.
Turning to returns, Persimmon is to pay a 125 pence regular annual dividend instalment in April, alongside a 110p payment of surplus capital in July.
Large-cap rivals Barratt Developments, Taylor Wimpey and Berkeley rose 3.7%, 3.4% and 2.5% respectively in a positive read-across. In the FTSE 250, Vistry was up 3.0%, as the homebuilder also reported a strong 2021 and reinstated dividends.
In the wider property sector, McKay Securities was up 29% after accepting a £272 million takeover offer from FTSE 250-listed Workspace, which was down 1.4%.
Oil majors Shell and BP were up 3.5% and 2.7% respectively, tracking spot oil prices higher.
Brent oil was quoted at $111.14 a barrel Wednesday morning, advancing from $106.10 at the London equity market close on Tuesday. The North Sea benchmark rose above $110 for the first time since 2014.
‘Western sanctions on Russia have so far excluded energy shipments, but traders have pushed up oil and coal prices sharply higher anyway, with gas prices also remaining supported,’ said ThinkMarkets analyst Fawad Razaqzada.
‘The crude oil market was already tight, even before the invasion of Ukraine by Russia. But now there are concerns that because of the ongoing situation, foreign refiners are going to be very reluctant to buy crude oil from Russia, with some banks also refusing to finance shipments of Russian commodities,’ added Razaqzada.
Conversely, BT was down 3.1% after Credit Suisse downgraded the telecommunications firm to 'neutral' from 'outperform'.
In Asia on Wednesday, the Japanese Nikkei 225 index closed down 1.7%. In China, the Shanghai Composite ended down 0.1%, while the Hang Seng index in Hong Kong finished down 1.8%. However, the S&P/ASX 200 in Sydney closed up 0.3%.
The pound was quoted at $1.3296 early Wednesday, down from $1.3334 at the London equities close Tuesday.
The euro was priced at $1.1093, soft from $1.1109. Against the safe-haven yen, the dollar was trading at JP¥115.25, higher against JP¥114.89.
Gold stood at $1,942.45 an ounce, higher against $1,930.54 late Tuesday.
‘Market sentiment continues to remain fragile, and until we get concrete news on a de-escalation in the conflict, the safe-havens are likely to be well supported at the expense of risk assets,’ commented Matthew Ryan, senior market analyst at financial services firm Ebury. ‘One of the key economic consequences of the crisis is expected to be even higher inflation.’
Wednesday's economic calendar has a eurozone inflation print at 1000 GMT. In addition, there is a key output meeting of OPEC and non-member producers, including Russia. US Federal Reserve Chair Jerome Powell delivers semi-annual testimony before Congress.
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