6pm: Oil falls

Oil prices slid more than 4% towards $72 a barrel amid fresh fears over the global economy and close to the new floor set by the UK government under its windfall tax plan.

BP fell 6.3p, to 462.6p and Shell lost 16.5p, to 2278p. In the FTSE 250 Harbour Energy fell 5.6p to 245.4p.

Crest Nicholson led a rally among housebuilders after UBS raised its rating to ‘neutral’ from ‘sell’ and lifted the target price to 245p from 210p. 

The investment bank said house prices have held up better than feared.

The FTSE 100 rose just 8.33 points, to close at 7570.69.

Heathrow

Heathrow said it has successfully managed eight days of strikes during the busiest days in May, with no delays at security and no flight cancellations thanks to a strong contingency resource.

“We have been building that contingency team ahead of the summer season and do not anticipate cancellations as a result of any future strike action,” it said in an update.

Heathrow reiterated calls for the UK Government to reinstate tax free shopping to let British businesses and the UK economy maximise the benefits from recovering markets.

It said Britain is losing out to neighbours in France, Italy and Spain, where visitors currently spend more than twice as much as in the UK.

Meanwhile, the three bank holidays in May helped drive monthly passengers at Heathrow up to 6.7 million

It has more daily flights between the UK and US as airlines switch capacity to North Atlantic routes and away from European and East Asian markets, which have been slower to recover

In May alone, 1.6m Heathrow passengers flew across the North Atlantic. One in four passengers flying between the US and Europe in May passed through Heathrow thanks to the choice of destinations and frequency. There are 248 daily flights to and from Heathrow connecting Britain to 31 US destinations.

Frasers stake in AO World

Mike Ashley’s Frasers Group has acquired an 18.9% stake in electrical retailer AO World for £75m.

The owner of Sports Direct, House of Fraser, Evans cycling and other chains said it bought 109.4 million shares at 68p each.

In a statement, it said: “The investment is the culmination of productive talks over the last two years about establishing a strategic partnership.”

Chief executive Michael Murray said: “Through this investment, Frasers will benefit from AO’s valuable know-how in electricals and two-man delivery, helping us to drive growth in our bulk equipment and homeware ranges. In turn, AO will have the opportunity to benefit from Frasers’ expertise and ecosystem.”

Glencore moves on Teck

Swiss commodities group Glencore has offered to buy Teck Resources’ steelmaking coal business as a standalone unit, after its $22.5 billon offer to combine the two companies was twice rebuffed by the Canadian miner.

Teck Resource has received several proposals for its steelmaking coal business.

Glencore, which mines and trades thermal coal, the fossil fuel used to produce electricity, said it would demerge the coal units of both companies.

CEO Gary Nagle in May said that buying Teck’s coal business as a standalone unit was a “distant second” for the Swiss mining company, as it still pursues its merger plans.

More rate rises likely

Jonathan Haskel, external member of the Bank of England’s Monetary Policy Committee, said in an article this morning “that it’s important we continue to lean against the risks of inflation momentum and therefore that further increases in interest rates cannot be ruled out. As difficult as our current circumstances are, embedded inflation would be worse.”

Global markets

Key US inflation figures and central bank announcements later in the week will dominate sentiment and activity.

The US Federal Reserve will announce its latest interest rate decision on Wednesday. Full story here.

Markets In Asia were mixed overnight. The Nikkei 225 index in Tokyo was up 0.5%. In China, the Shanghai Composite was down 0.1%, while the Hang Seng index in Hong Kong was down 0.2%.