Oil and gas groups led the FTSE 100 into positive territory yesterday, offsetting losses for insurers and retailers. Tullow Oil was at the front of the pack, soaring by more than 20 per cent, after revealing new oil finds in Ghana and Uganda that it said were likely to lead to “material upgrades” in reserve estimates.

The explorer’s Kingfisher field is the largest light-oil discovery in East Africa, with analysts speculating that Tullow is significantly closer to the volumes needed to justify an export pipeline. Tullow rose 101p to 596½p, helping Heritage, the operator of the field, to add 19p to 204p.

The news came as Brent crude hit $47 a barrel after the International Energy Agency predicted that global growth in oil demand would resume next year and expectations grew that Opec would cut production soon.

Higher oil prices helped Cairn Energy to rise 196p to £18.40. BG climbed 50½p to 989½p and BPadded 24¾p to 537¼p.

However, the prospect of more expensive fuel put pressure on British Airways, which dropped 7.9p to 165p. Dealers in BA were also concerned about the possibility of greater competition on short-haul flights out of Heathrow if Virgin Atlantic ended up doing a deal with bmi. Virgin is in talks with Lufthansa, bmi’s majority owner, about the future of the airline, which could give it greater access to the UK’s largest airport. The flag carrier was also hit by a fine of A$5 million (£2.25 million) from the Australian competition authorities for price-fixing freight fuel surcharges between 2002 and 2006 with Qantas.

The FTSE 100 advanced 21.41 points to 4,388.69, with insurers the worst performers. Standard Life lost 19p to 268p after Morgan Stanley down-graded the stock to “underweight”, noting that the combined impact of equity market weakness, wide corporate bond spreads and tumbling interest rates would be perilous for many insurers.

The rest of the increasingly buffeted sector, which has outperformed the wider market so far this month, surrendered gains made this week. Friends Provident, down 8.2p to 79.8p, was the biggest faller. Prudential slipped 15¼p to 365p and Aviva fell 11¾p to 399p after Goldman Sachs removed the stock from its “conviction buy” list. There was also growing uncertainty over AIG’s asset sales, given market conditions.

Retailers had another bad day as traders looked ahead to what is shaping up to be a miserable Christmas on the high street. JPMorgan said that the downturn in consumption had been much more widespread than expected. Tesco, down 6.6p to 327.7p, is to offer deep discounts on hundreds of products in the run-up to Christmas. HMV, down 3¼p to 107¾p, reported underwhelming first-half results, and Wm Morrison fell 7p to 272p after Goldman Sachs cut its rating on the supermarket chain to “sell”, believing that sales growth would decline.

BHP Billiton lost 14p to £12.20 and Anglo Americanfell 3p to £15.32 when Bernstein cut its price targets on the stocks after lowering 2009 forecasts for copper, aluminium and iron ore.

— New York: Anxiety about the fate of the Detroit carmakers surged, sending stocks sharply lower. The Dow Jones industrial average closed at 8,565.09 points, down 196.33.

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