Market report: Tuesday close

RECORD high oil prices have sparked jitters across world stock markets. New York's Dow closed below 10,000 for the first time in five weeks as investors squared up to the costly reality of paying more than $50 for a barrel of oil.

But while bears predict that high oil prices are now certain to finish off the UK stock market's late summer rally, some rising oil majors perversely propped up the FTSE 100 index, which was trading up 26.1 points at 4567.3.

Shell was 1 1/4p down at 407 1/2p, BG Group was 12 1/4p stronger at 372 1/4p and BP 7p higher at 539p.

How much further oil shares can go will dominate City minds this autumn. SG Securities thinks there's plenty of room for growth. It highlights a wide disparity between oil prices, which have climbed 53% since the start of the year, and oil stocks, which have gained an average of 13%.

'If caution about oil prices is now justified, oil shares should start to outperform crude, along with upward revisions to EPS forecasts and fair values,' SG says.

Investors were also digging deep for the miners today as a huge iron ore agreement for BHP Billiton sharpened appetites. The mining and oil conglomerate has struck a deal to supply ore worth a total of $3.2bn (£1.8bn) to four of China's leading steel mills over the next 10 years.

BHP soared 28p to 584 1/2p, with the positive sentiment lifting Rio Tinto 52p to 1472p. All the other major mining companies were up on the FTSE leader board with Antofogasta ahead 28p at 1116p, Xstrata rising 14p to 902p and Anglo American 37p stronger at 1311p.

Regal Petroleum rose 17 1/2p to 356p, to the delight of executive chairman Frank Timis who took the opportunity to top up his shareholding, buying 100,000 shares at an average price of 340p and lifting his stake to 7.6%. Regal revealed half-year results yesterday and, while forecasting a full-year loss, unveiled an independent survey confirming a billion barrels of oil at its wildcat Greek discovery Kallirachi in the North Aegean sea.

Fortune Oil, which is involved in oil and gas infrastructure projects and trading activities in China, was up 0.75p at 6.875p on the back of strong half-year figures with earnings per share doubled to 0.8p.

BSkyB suffered another day of falls, down 7 3/4p at 478p, as the market absorbed a pessimistic analysis from CSFB on the cost of promising free installation for Sky digital packages, and worries about the numbers of new subscribers.

P&O was among the top perfomers in the FTSE 250, up 11 1/2p at 258 1/2p, as the City applauded restructuring plans that will slash ferries, routes and staff to save up to £55m a year.

Lloyd's of London insurer Atrium, up 2p at 184 1/2p, is paying out its first dividend for four years after almost doubling first-half pre-tax profits to £16.1m. The interim dividend is 2p. Atrium expects a $34m hit from the first three hurricanes of the season.

Heavy fallers among the small caps included Pressac , down 2.13p to 6.125p. The specialist manufacturer of electrical, electronic and decorative bits for cars and telephones said profits had fallen by a third to £1.9m and trading remained tough.

Surveillance equipment maker Screen fell 0.63p to 3.75p. Losses have deepened as it struggles to rectify operational problems. It will end the year in the red and is debating whether to launch a capital fundraising or link with a rival business.