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Tullow Oil climbs more than 3% on Uganda deal as FTSE drifts higher

Exploration group signs licensing deal with Ugandan government, while leading shares await US employment data

As the FTSE 100 heads for another new six month peak, Tullow Oil has gushed more than 3% higher.

The exploration company has signed two new production licences with Uganda and is going ahead with a deal to partner with Total and China’s CNOOC in the fields involved at the Lake Albert Rift Basin. Tullow expects the transfer of funds to take place as soon as possible. Tullow has also been awarded a production licence for the Kingfisher project.

The news has lifted Tullow 51p to £14.91 and helped the leading index climb 8.36 points to 5804.43 ahead of the US non-farm payroll figures this afternoon. A rise of between 135,000 and 150,000 is expected. Manoj Ladwa at ETX Capital said:

Equities have begun the trading session quietly but with a mildly positive feel about them as the FTSE 100 shows no signs of selling off. Trading is likely to be quiet ahead of non-farm payroll numbers out later in the session. Anything greater than the market expects is likely to see equities closing on the highs for the week.

BT has climbed 6.3p to 212.2p after its results, while Man has recovered another 6.1p to 212p with traders saying the hedge fund group’s shares had been oversold recently on worries about its growth prospects.

Insurer Admiral is topping the risers, up 87p to £10.49 after positive comments from Munich Re. Ben Cohen at Collins Stewart said:

Munich Re expects €350m premium growth in 2012 due to ‘strong price increases in recovering markets (eg proportional UK motor)’. Munich’s biggest relationship in motor by some margin is with Admiral (40% co-insurance in the UK, 65% reinsurance outside the UK (ex-France)).

We think there is meaningful read-across to our Admiral forecasts. Since the third quarter update, we had been assuming flat premiums in the UK in 2012. Working backwards from Munich’s €350m, we assume €250m of the growth will come from Admiral, which we split three-quarters UK, one-quarter international. This leads us to a 6% increase in UK profits in 2012 and 10% in 2013 (because commissions earn through over time), slightly offset by a higher loss in international, for a 4% earnings per share ncrease in 2012 and 9% for 2013.

We raise our price target from 880p to 975p.

Game Group is one of the day’s stars, up 35% to 7.2p after the troubled retailer agreeing revised lending terms with its banks.

Dixons Retail is up 0.28p at 13.98p after John Lewis reported strong demand for electrical goods last week – up 19.2% helped by continuing demand for tablets and notebooks. Freddie George at Seymour Pierce said:

The news on electricals should help to support the Dixons Retail share price and shows that the positive trend seen in electrical sales in the first couple of weeks of January has continued throughout the rest of the month. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds