FTSE 100 Live 22 November: Oil prices fall, energy market, Europe Covid-19 restrictions, Europe shares, strategic oil reserves, KKR Telecom Italia

Europe’s major telecom stocks have dialled up big gains after one of the world’s biggest private equity firms reignited takeover interest in the sector.

Buy-out group KKR’s weekend approach to the board of Telecom Italia is worth $12 billion (£8.9 billion), a 45% premium on Friday’s level following two profit warnings in the past three months.

The prospect of more big private equity deals ensured European markets started the week on the front foot, despite jitters over more Covid-19 restrictions.

The FTSE 100 index climbed 22.83 points to 7246.46, driven by telecom shares after KKR’s move for Italy’s biggest phone company.

BT Group, which has been seen as a potential target for French billionaire Patrick Drahi, rose 3% or 4.8p to 165.45p and Vodafone added 2.12p to 115.74p.

Royal Mail shares led the blue-chip risers board after its recent pledge to return £400 million to shareholders helped the delivery firm’s shares add another 4% or 21.5p to 520p. They have now improved 16% in the past week.

Private equity speculation also gave another lift for Marks & Spencer shares after the Sunday Times reported that Apollo had been circling the retailer in recent weeks.

Apollo had regarded M&S as a bargain, but that was before a 24% jump for shares in the wake of two strong trading updates and several broker upgrades.

The stock today lifted another 7.5p to 248.3p, up 3% for its highest level since May 2019. The performance helped the FTSE 250 index improve 17.55 points to 23,509.79.

Frontier Developments, the Cambridge-based video games developer, lost more than a third of its value on AIM after it reported lower-than-expected PC sales for its newly-released sequel to Jurassic World Evolution.

The company blamed a crowded release schedule, but investors are worried that life is harder for gaming firms after their pandemic boost. Shares were 923p lower at 1572p.

The boss of LV= today attacked the “fog of disinformation” surrounding the mutual insurer’s planned sale to Bain Capital, as he fights to win approval for the controversial deal.

Mark Hartigan told the Standard: “We’ve got to lift the fog on some of the disinformation that’s out there.”

The comment came as LV published new details on the process that led to the proposed £530 million sale to Bain Capital. LV is facing a wall of opposition and rival bidder Royal London is said to be preparing a counter offer in case the Bain transaction collapses.

The deal, struck last year, has been attacked by the press and politicians including former Tory Deputy Prime Minister Lord Hestletine. Critics say LV’s 1.2 million members are getting a raw deal with a payout of just £100.

Opponents also object to LV’s loss of mutual status and worry about private equity ownership.

Metals miner Hochshild’s market value almost halved today as Peru’s socialist government moved to accelerate mine closures amid political turmoil and environmental protests.

The FTSE 250-listed group called the ruling “illegal” and insisted its mines operate under the highest standards. It came after Peru’s PM Mirtha Vasquez signalled that four mines in the Ayacucho region – including two run by Hochschild – would be closed “as soon as possible”.

Peru has been riven by turmoil since former union activist Pedro Castillo took power in July with a pledge to raise taxes to fund reforms. Mines across the country have been blockaded and firebombed.

Anglo American, Glencore and BHP also operate in the country.

Shares in Hochschild tumbled by 57% to 70p as markets opened, before trading down 41% down at 99.75p

Prime Minister Boris Johnson has just announced the plans at the annual Confederation of British Industry (CBI) conference, which kicks off today. The EV mandate is part of efforts to ban new petrol and diesel cars in the UK from 2030 as part the country’s net zero plans.

Pod Point, founded in 2009, installs and runs electric vehicle charging infrastructure across the UK. Pod Point has installed over 89,000 home charge points and 13,000 commercial units, many of them through partnerships with companies like Barratt Homes, Lidl, and Tesco.

Shares are up 5% to 254.3p.

The volume of new starts on London office construction sites and appetite for speculative development has risen, new research suggests.

According to Deloitte’s London office crane survey, new starts increased by 10% from the previous study in May, to 3.4 million square feet between April and September.

That is well above the long-term average of 2.4 million square feet.

Everyman Media Group has forecast higher profits, with the upmarket cinema chain seeing good customer “appetite” to watch films on the big screen.

The AIM-listed firm, which has 35 venues and is known for its sofa seating and wine menus, said admissions since its last update in September are ahead of forecasts.

The company, which is led by Alex Scrimgeour, said: “Looking beyond the current financial year, early indications suggest the appetite for cinema remains strong and we are optimistic for the outlook of the sector.”

The shares increased 7.95p, or 5.6%, to 149.95p.

Shares in BT Group and Vodafone are more than 2% higher during a positive start to the week for the FTSE 100 Index.

The surge for the telecoms sector comes after buy-out giant KKR made a $12 billion approach for Telecom Italia.

Victoria Scholar, head of investment at Interactive Investor, said: “The offer signals a broader appeal to deep-pocketed US private equity giants of the European telecoms sector.”

Other stocks on the risers board include British Airways owner IAG and engines giant Rolls-Royce as they put back some of the losses seen on Friday.

The FTSE 100 index rose 24.09 points to 7247.66, having fallen over the past week.

Marks & Spencer shares was up another 3% in the FTSE 250 index after the Sunday Times reported that private equity giant Apollo had been circling the retailer prior to its recent share price recovery. Shares today lifted 7.5p to 248.3p.

Brent crude oil is below $79 a barrel as Europe’s deteriorating Covid-19 situation continues to reduce the demand outlook for fuel.

As well as the prospect of tighter Covid restrictions, prices have come under pressure after Japan’s prime minister Fumio Kishida said he is considering the release of strategic oil reserves.

His comments at the weekend follow a request by the Biden administration for major oil consuming nations to release some of their stockpiles in a move to curb high prices.

Brent closed last week below $80 a barrel for the first time in seven weeks and was 0.25% cheaper at $78.70 a barrel today. West Texas oil fell sharply overnight by almost 4% to $76.10 a barrel.

Michael Hewson of CMC Markets said: “While the slide in oil prices is a welcome development in terms of concerns over higher inflation, the collateral damage from tighter restrictions won’t do much in terms of alleviating supply chain disruption.

“The one upside to temporary lower demand is it allows the opportunity for inventories to recover.”

The FTSE 100 index, which fell 0.4% on Friday following Austria’s announcement of new lockdown measures, is expected to open 12 points higher at 7,235 today.

The week ahead includes the minutes from the most recent meetings of policymakers at central banks in the US and Europe, while on the corporate front in London there are results from caterer Compass and challenger bank Virgin Money.

US markets will be closed on Thursday for the Thanksgiving holiday.