Market Report: Cairn lifted by hopes for Greenland drilling

Cairn Energy stood out as the FTSE 100 touched a new 16-month high yesterday, with buyers outnumbering sellers amid hopes for the oil and gas prospector's foray into Greenland.

Citigroup said the fast tracking of Cairn's offshore exploration project had brought the company "back under the exploration spotlight". Cairn plans to drill prospects across its Disko blocks in the Baffin Bay basin later this year. While it has yet to release guidance on individual prospect sizes, Citi said the Greenland campaign could be worth about 45p per share on a risked basis and had the "potential to prove transformational".

"Cairn has raised the possibility of eyewatering prospect sizes," the broker said, upgrading the stock from "hold" with a 274p target price to "buy" with a 420p target. "Indeed, the decision to commit two rigs to the region, which we estimate could cost up to $400m, reinforces the company's belief in the prospectivity of its acreage."

Beyond Greenland, near-term news about Cairn's operations in India also has the "potential to surprise on the upside", Citi added, boosting sentiment around the stock.

The assessment was supplemented by renewed weakness in the US dollar and upbeat export figures from China, which also supported the commodity-related stocks and helped to drive up Cairn's share price by 8.4p to 370.3p.

Traders welcomed official data showing that Chinese exports rose in December for the first time in 14 months, adding to evidence of the country's economic recovery.

Coupled with currency movements, the figures lifted commodity prices, which in turn boosted oil and gas and mining stocks. Though a number of stocks fell back as investors moved to bank profits in the latter part of the session, Lonmin, which touched 2198p before closing 31p higher at 2157p, managed to remain in the black.

Others were less fortunate, including BHP Billiton, which was down 11p at 2104.5p, Kazakhmys, which closed 7p lower at 1492p, and Vedanta Resources, which fell 52p to 2834p.

Overall, the FTSE 100 was broadly unchanged at 5,538.07, up 3.8 points, while the FTSE 250 rose by 37.39 points to 9,726.44. The benchmark index touched a 16-month high, rallying to 5,600.48 at one point as commodity-related stocks gained ground, but it fell back as investors moved to bank profits in that sector.

ICAP was among the laggards, declining by 5.7p to 450.9p, with traders pinning the weakness on a placing of about 10.3 million shares by HSBC. Shortly after the close of play, it emerged that INCAP Finance, a subsidiary of the ICAP chief executive Michael Spencer's IPGL vehicle, had sold seven million shares in ICAP at 440p apiece, while Mr Spencer had offloaded 3.3 million shares at the same price.

Elsewhere, the banking sector was unsettled, with Royal Bank of Scotland retreating by 0.14p to 34.98p and Standard Chartered falling 34p to 1590p. Barclays, which was raised from "hold" to "buy" by Citigroup, was also 3.55p lower at the end of the day, at 317p. "In our view, the market is applying too low a rating to Barclays' earnings, considering these earnings to be 'low quality' and continuing to view the stock as relatively 'high risk'," Citi said, highlighting the scope for a re-rating of the bank's share price.

On the upside, commercial property was in favour after Goldman Sachs weighed in, saying that a combination of strong demand and limited supply was set to drive the recovery in prime office rents. "We believe office market rents are likely to recover strongly from 2011 across most of Europe, but particularly in London and Stockholm," the broker said. It recommended Land Securities, which closed 19p higher at 683p, because of its exposure to the London market.

"While about 44 per cent of the company's income-producing portfolio is in London offices, its plan to launch three West End office developments to let in 2012 amplifies its leverage to positive market trends," the broker added, as it promoted the stock to its widely followed "conviction buy" list.

Goldman was less keen on Liberty International, which came under pressure and fell 2.8p to 493.1p after the broker switched its stance from "neutral" to "sell".

Further afield, Morgan Stanley supported sentiment around the construction and support services group Carillion, which rose by 5.5p to 314.5p after the broker initiated coverage on the stock with an "overweight" stance. Bank of America-Merrill Lynch also weighed in, setting a "buy" rating on Carillion's shares. "We see 2010 as the year the story will shift to organic opportunities after five years of portfolio reshaping through mergers and acquisitions," Morgan Stanley said.

Also on the upside, Rentokil Initial was 2.2p ahead at 117.2p following some words of support from Panmure Gordon, which said the stock was an "attractive investment proposition for 2010". "Since the new management team came in during 2008 to turn Rentokil around, the recovery strategy has been well executed," the broker added. "We expect this momentum to build further during 2010, providing positive newsflow on a number of different fronts."

A 1930 image of the Karl Albrecht Spiritousen and Lebensmittel shop, Essen. The shop was opened by Karl and Theo Albrecht’s mother; the brothers later founded Aldi
Lane Del Rey performing on the Pyramid Stage at Glastonbury 2014
people... but none of them helped me get a record deal, insists Lana Del Rey
Arts and Entertainment
Dwayne 'The Rock' Johnson stars in Hercules
filmReview: The Rock is a muscular Davy Crockett in this preposterous film, says Geoffrey Macnab
Arts and Entertainment
British author Howard Jacobson has been long-listed for the Man Booker Prize
Life and Style
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmA cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Louis van Gaal watches over Nani
Arts and Entertainment
Flora Spencer-Longhurst as Lavinia, William Houston as Titus Andronicus and Dyfan Dwyfor as Lucius
theatreThe Shakespeare play that proved too much for more than 100 people
exclusivePunk icon Viv Albertine on Sid Vicious, complacent white men, and why free love led to rape
New Real Madrid signing James Rodríguez with club president Florentino Perez
transfersColombian World Cup star completes £63m move to Spain
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Stir crazy: Noel Fielding in 'Luxury Comedy 2: Tales from Painted Hawaii'
comedyAs ‘Luxury Comedy’ returns, Noel Fielding on why mainstream success scares him and what the future holds for 'The Boosh'
Life and Style
Flow chart: Karl Landsteiner discovered blood types in 1900, yet scientists have still not come up with an explanation for their existence
lifeAll of us have one. Yet even now, it’s a matter of debate what they’re for
Arts and Entertainment
'Weird Al' Yankovic, or Alfred Matthew, at the 2014 Los Angeles Film Festival Screening of
musicHis latest video is an ode to good grammar. But what do our experts think he’s missed out?
Hotel Tour d’Auvergne in Paris launches pay-what-you-want
travelIt seems fraught with financial risk, but the policy has its benefits
Arts and Entertainment
booksThe best children's books for this summer
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Insight Analyst – Permanent – Up to £40k – North London

£35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...

Business Analyst - Banking - Scotland - £380-£480

£380 - £480 per day: Orgtel: Business Analyst - Banking - Edinburgh - £380 - ...

Risk Analyst - (Multi Asset class) £70k - £80k

£70000 - £80000 per annum: Harrington Starr: My client is a leading financial ...

Programme Director - Conduct Risk - London

£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn