Oil weighs on FTSE, Kingfisher shines

By Julien Ponthus

LONDON (Reuters) - A slump in oil prices hit British majors on Friday, limiting the gains of the FTSE 100 benchmark index while Kingfisher shone after Australia's Wesfarmers (WES.AX) said it would sell rival UK home improvement chain Homebase.

The blue chip FTSE 100 (.FTSE) ended the day up 0.18 percent at 7,730.28 points but posted a weekly loss of 0.6 percent, breaking an eight-week run of gains.

"The move lower in the oil market on account of speculation that OPEC will raise output slightly has hit London-listed stocks like BP, Royal Dutch Shell and Tullow Oil," said David Madden, an analyst at CMC Markets UK.

Index heavyweights BP (BP.L) and Royal Dutch Shell (RDSa.L) lost 2 percent and 1.5 percent respectively while Tullow Oil fell 4.1 percent.

Confirmation that Britain's economy barely grew during the first quarter of 2018 added pressure to the pound on a five-month low as worries over Brexit continued to take their toll.

A lower sterling typically provides an accounting boost to UK companies who sell products or services in foreign currencies.

Kingfisher (KGF.L), Europe's second largest home improvement retailer, was a top gainer, up 3.4 percent, as Wesfarmers' sale of Homebase is expected to ease competition in the DIY sector.

Analysts at Jefferies said the sale constituted "very good news" for Kingfisher and its B&Q chain, which competes with Homebase.

"Today's news should see B&Q’s biggest competitor become much more sensitive to short, and mid term, margin and cashflow challenges," they argued.

Britain's BT (BT.L) rose 3.3 percent. The group received informal interest from infrastructure funds keen to own a stake in its core fixed-line network, a person familiar with the matter told Reuters.

Royal Mail (RMG.L) shares sustained the heaviest losses, down 2.8 percent as broker Berenberg downgraded the stock to "sell" on increasing growth and profit risks.

It also noted that complying with new EU regulations to protect privacy may weigh on marketing activities.

AstraZeneca (AZN.L) rose 0.9 percent after its immunotherapy drug Imfinzi hit a second important goal by improving overall survival in lung cancer patients, boosting prospects for a medicine that has already got off to a promising commercial launch.

Among smaller companies, Gold miner Centamin (CEY.L) dropped about 18 percent after it made a drastic cut to its full-year production guidance while Capita (CPI.L) jumped 7.7 percent after it raised 681.4 million pounds through a rights issue.

Environmental infrastructure company Pennon Group added 7.6 percent after reporting its full-year profits. Gambling company GVC Holdings (GVC.L) was up 4.3 percent after it raised its forecast of cost savings from its 4 billion pound acquisition of Ladbrokes Coral.

(Reporting by Julien Ponthus; Editing by Alison Williams)