UPDATE 2-Oil surge drags FTSE 100 out of losses amid virus worries

  • Reuters
UPDATE 2-Oil surge drags FTSE 100 out of losses amid virus worries

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* FTSE 100 up 0.5%, FTSE 250 down 0.8%

* BP , Shell jump tracking soaring oil prices

* Recruiter Hays slides on emergency equity raise plan

* Ex-dividend stocks cap FTSE 100 gains (Updates to market close)

By Sruthi Shankar and Devik Jain

April 2 (Reuters) - Oil prices roared back on Thursday, pulling Britain's commodity-heavy FTSE 100 out of early losses sparked by a record surge in U.S. weekly jobless claims.

The FTSE 100 .FTSE closed up 0.5% after gaining as much as 1.5% in late afternoon trading, with energy stocks .FTNMX0530 , which have shed about a third in value this year, jumping 7.8%.

Major players BP BP.L and Royal Dutch Shell RDSa.L gained 6% and 9%, respectively, after U.S. President Donald Trump said he expects Russia and Saudi Arabia to announce a major oil output cut, signalling willingness by both countries to end their oil price war. O/R

A 25% surge in oil prices dispelled gloom in markets after data showed U.S. claims for unemployment benefits shot to a record high of more than 6 million last week amid tighter stay-at-home measures to curb the coronavirus pandemic. doubling of jobless claims will fill investors with a sense of unease about the outlook," said Seema Shah, chief strategist at Principal Global Investors. "With lockdowns becoming stricter and being extended, we should anticipate further surges in jobless claims over the coming weeks."

In Britain, a survey conducted between March 9 and March 22 showed more than a quarter of UK companies reduced staff levels in the short term. British Airways ICAG.L struck a deal with its union to suspend thousands of staff in one of the airline industry's most dramatic moves. Separately, IAG cancelled its final dividend. FTSE 100 concluded its worst quarterly performance since 1987 on Tuesday as the fast-spreading pandemic forced lockdown in most parts of the world, bringing economic activity to a near standstill.

Analysts are predicting a 21.9% decline in earnings for companies listed on the pan-European STOXX 600 .STOXX in the second quarter, according to Refinitiv data. on FTSE 100 were also limited by falls in shares of Standard Life Aberdeen SLA.L , Phoenix Group Holdings PHNX.L and Smith & Nephew SN.L as they traded ex-dividend.

Cruise operator Carnival (NYSE: CCL ) Corp CCL.L dropped 22.3% to the bottom of the index, as it raised $6.25 billion by issuing new debt and equity, borrowing at a high cost to weather the economic storm from the pandemic.

The domestically focused midcaps .FTMC fell 0.8%, with food producer Bakkavor Group BAKK.L sliding 19.3% after it revealed that the outbreak led to a cut in orders and suspended dividend.

Recruiter Hays HAYS.L dropped 13.3% after it announced an emergency 200 million-pound issue of shares as it sought to prop up its finances.

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