FTSE 100 trades in tight range; Tullow declines

LONDON (MarketWatch) � British stocks were in and out of positive territory on Wednesday, eventually ending moderately higher, as investors awaited the outcome of key debt talks in Greece.

The FTSE 100 UK:UKX �rose 0.2% to close at 5,702.4.

After talks stalled on Friday, the Greek government resumed discussions with its bondholders on Wednesday to discuss a voluntary write-down on the country�s sovereign debt.

Click to Play Kraft plans to cut 1,600 jobs

Kraft Foods plans to eliminate about 1,600 positions in North America as it moves to split into two separate companies. Photo: Reuters

Prime Minister Lucas Papademos said ahead of the meeting that he would consider forcing a private-sector haircut on the debt if a deal can�t be reached, according to a New York Times interview published Wednesday.

Richard Perry, chief market strategist at Central Markets, said investors are reluctant to make big moves until the talks in Greece and other key events like the Jan. 30 European Union summit unfold.

�The big focus is the EU summit and the Greek haircuts, if and when we get news or clarity on either, the market might make more of a move,� Perry said. �And we�ve not heard a great deal from Merkel and Sarkozy, who have recently been a major driving force pushing the market up and down.�

But some stocks managed solid gains, including India-focused energy firm Essar Energy PLC UK:ESSR , which rallied 7.2% to top London�s benchmark exchange. The company sank 26% on Tuesday, after a court ruled that its subsidiary Essar Oil could no longer pay sales tax to the government in deferred installments.

Hedge-fund firm Man Group PLC UK:EMG �jumped 6.8% after it issued its latest trading statement. The company reported funds under management for the three months ended December 31 of $58.4 billion, a 9.5% drop from the prior quarter. �Trading conditions have been tough for Man in the second half of 2011,� said Peter Clarke, chief executive.

Travel and leisure stocks traded higher, led by cruise operator Carnival PLC UK:CCL �CUK ,�owner of the capsized liner Costa Concordia. Carnival shares climbed 3.3%, InterContinental Hotels Group PLC UK:IHG �added 2.4% and Compass Group PLC UK:CPG �advanced 2%.

But International Consolidated Airlines Group PLC UK:IAG �bucked the trend, falling 0.5%. Spanish newspaper El Pais reported that pilots from the group�s Iberia airline will begin twice-weekly strikes from Feb. 3 for an indefinite period. Pilots already staged walk outs on four days in December and January.

Shares in the supermarkets were also up, with Tesco PLC UK:TSCO �and Mw. Morrison Supermarkets PLC UK:MRW �gaining 1.1% and 1.8%, respectively.

On the negative side, Tullow Oil PLC UK:TLW �was the index�s biggest decliner, with shares down 4.2%. The energy firm published an update ahead of its full-year results scheduled for release on March 14. It said it expects to report record financial results and sales revenue of $2.3 billion, more than double the 2010 figure. Tullow also said it had signed a memorandum of understanding with Royal Dutch Shell PLC UK:RDSA �to jointly explore for oil and gas at sites in the Atlantic Basin. Tullow and Shell�s new partnership

The exploration firm also expects 2011 capital expenditure costs to reach $1.4 billion, rising to $2 billion in 2012. A Financial Times report said those figures may have deepened worries of declining asset values as oil exploration becomes more costly.

Aerospace and defense firm Rolls-Royce Holdings PLC UK:RR �slid 1.8%, after J.P. Morgan Cazenove cut its rating on the stock to neutral from overweight, saying there were significant headwinds facing the firm.

Telecommunications firm BT Group PLC UK:BT.A �moved down 0.9%. UBS downgraded its rating on the stock to neutral from buy, citing threats from new entrants as key concerns for the company in the coming year.

Outside equity markets, the U.K.�s Office of National Statistics released employment data for September to November, showing the unemployment rate in Britain reached 8.4%, a 0.3% rise on the previous quarter.