Market Report: Kurdish black gold has Genel gushing

Kurdistan and Iraq still can't agree on payments for oil exports, but that hasn't stopped Tony Hayward and Nat Rothschild's Genel Energy shipping black gold out of the country.

Genel, which is backed by Mr Rothschild and run by former BP boss Mr Hayward, has begun shipping oil out of the region via Turkey despite Iraqi officials' and the Kurdistan Regional Government's failure to agree terms on payments for the exports.

Exports were halted last month through the Baghdad-controlled Iraq-Turkey pipeline. The flowing of oil again is a challenge to Iraq's control in the area.

After war and unrest, even five years ago the semi-autonomous Kurdish region was barely on the oil map. But now global explorers have noted its potential, even in the face of continued political problems.

Genel's share price gushed up on the news and gained 5p to 770p.

Shares in fellow oil explorers in the area also lifted, with the FTSE 250 group Afren up 0.4p to 139.4p, while AIM-listed Gulf Keystone Petroleum, which is developing the lucrative Shaikan Block, edged up 1.25p to 182.75p.

The International Energy Agency predicted that Iraq production could double to more than 6 million barrels a day by 2020, and by the 2030s it could be second only to Saudi Arabia. The Kurdish region's potential is smaller, but the local government hope production could grow to 1 million barrels a day by 2015 and 2 million by 2019.

The benchmark index was led down during afternoon trade by caution in the US markets ahead of the start of fourth-quarter earnings last night. In Europe, eurozone retail and confidence data was better than forecast, but the FTSE 100 index ended down 10.95 points at 6,053.63.

Stragglers on the blue-chip index included the travel group Tui. Analysts at Morgan Stanley downgraded the tour operator, which only last month rejoined the index, to underweight – a sell – and the shares booked a loss of 9.8p to 276.8p.

On the flip side, the pharmaceutical group Shire was top of the tree when it added to its supplies by buying a US genetic-disorder drug group, Lotus Tissue Repair. The shares recovered 49p to 1,963p.

After a sell-off of its shares last week, the supermarket group Sainsbury's ticked up 7.3p to 339p ahead of its trading update today. The City was last week concerned that the group had a bad Christmas, but Kantar Worldpanel revealed that it was the only one of the big four supermarkets to have gained market share.

On Monday, the Citigroup analyst Simon Weeden said a takeover of the telecoms giant Vodafone by US joint-venture partner Verizon was "no longer as outlandish as it once seemed", and today Verizon boss Lowell McAdam stoked the fire and said a purchase of Vodafone's 45 per cent of Verizon Wireless is "feasible". Does Vodafone want to sell? Traders aren't sure, but the stock dialled up a 2.75p gain to 162.4p.

Investec's banking guru Ian Gordon has turned against HSBC, reducing his rating from buy to hold. He raised his share target price to 685p, but thinks the bank has too much capital, and argues that "until investors can see how and when the 'freed-up capital' can be deployed or returned, further upside appears much more limited". The shares dipped 7p to 659.2p.

There was bad news for African Barrick Gold, which was buried at the bottom of the mid-cap index after a deal by its Canadian parent company, Barrick Gold, to sell it to China National Gold was abandoned. The shares retreated more than 20 per cent, and closed down 91.9p to 352.1p.

On AIM, Asos is no longer in fashion with analysts at Jefferies. They have downgraded it from buy to underperform, meaning it is time to sell. Jefferies' David Reynolds doesn't think Asos has done any thing wrong, he just has a "sense that the risk/reward profile has changed".

He reckons its plan to move in to Russia and China requires "fault-free execution", but he warns this might not be possible. He still regards the group as a "superb example of disruptive innovation" which is "imaginatively led and executing well" but its valuation just seems "too rich".

Mr Reynolds retains his share price target of 2,199p. The shares lost 52p to 2,645p.

The interactive gaming company Netplay revealed strong, full-year results earlier in the week, and today analysts at Daniel Stewart raised their share price target to 15p and rated it a buy. Its shares advanced 0.25p to 12.5p.

Nautilus Minerals, the underwater precious metals miner, said it had received an approach from investor Michael Bailey. The group said it had not had any contact with the potential bidder, but the shares collected 11.25p to 40p.

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