Tullow Oil falls as FTSE 100 treads water

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Investors were disappointed with the explorer's latest update.

Exploration group Tullow Oil (LSE: TLW.L - news) was the laggard after investors shunned the shares following the company's latest market update.

Tullow dropped 4.5pc in early deals, suffering the heaviest fall on the FTSE 100, after its daily production figures came in just below expectations. Numis analyst Sanjeev Bahl described the update as a "mixed bag" and rates the stock a "hold".

"The impact of the production shortfall is more to volume than cashflow given the relatively low margin 'barrels' lost," he said.

Tullow stood out in a flat market, with the wider FTSE 100 (FTSE: ^FTSE - news) up just 1 point this morning but keeping above the 6,100 barrier the index broke through earlier this week. The mid-cap FTSE 250 (FTSE: ^FTMC - news) advanced 60 points in early trade.

"The start to the year has been impressively bullish," said Angus Campbell, head of market analysis.

"The avoidance of the fiscal cliff, some good economic data, decent business surveys, good eurozone peripheral debt bond auctions and the pushing back of the Basel deadlines have all meant that investors are upping the ante and happy to buy into equities in 2013, but there’s every chance that this enthusiasm could lead to complacency. When everyone’s a bull then it’s time to get out."

Elsewhere among the blue-chips, British Airways parent International Airlines Group flew 2.6pc higher, topping the benchmark index, after UBS upgraded the shares to "buy" from "neutral".

"During December we were somewhat surprised that an accord with the Spanish unions to reach an agreement on a five-year labour deal was agreed and strikes called off. We think some of the Iberia restructuring risk has dissipated and, although still challenging, we are becoming more confident on positive talk results," analysts at the broker said.

Insurer Aviva , which was hurt by worries over a reduction in the dividend early this week, put on 2.1pc after experts at Citigroup (NYSE: C - news) made the case for the stock and allayed the market's fears.

"Aviva (LSE: AV.L - news) is building strong free cash generation," said analysts at the bank, who raised their rating to "buy".

"We believe Aviva can and will maintain its dividend for full year 2012, while still being able to reduce leverage through redeeming hybrid debt. The current estimated dividend yield is attractive at 7pc, although we expect the scrip option to remain for the next few years."