FUNDVIEW-UK energy shares lag surge in oil prices -Rensburg

LONDON, June 9 (Reuters) - Shares in UK energy majors do not yet reflect the surge in crude oil prices and could offer a store of value, a Rensburg fund manager said.

But longer term, oil is a danger to global growth and it would be wise to remain defensive said Colin Morton, investment director of the 230 million pound UK equity income fund and the 85 million pound Blue Chip Growth Fund at Rensburg Fund Management.

BP (BP.L) and Royal Dutch Shell (RDSa.L) are top weightings in his portfolio.

While the oil price may look ready to peak after leaping $11 on Friday to a record above $139 a barrel, the market is yet to price such high crude prices into the sector's value, he said.

"I still think there's some decent value there," he said. "In most people's numbers, at the moment they've got the oil price settling around $80-85," he said.

Shares in Shell and BP have fallen 7 and 3.3 percent, respectively, since the start of the year, compared with the 42 percent rise in the price of crude oil and an 8.5 percent drop in the FTSE 100 index .FTSE.

Oil shares generally have lagged the rise in the price of crude as higher oil prices do not necessarily translate into higher profits for the producers as margins are under pressure due to high costs.

This is reflected in the valuations of the likes of BP and Shell, which both trade at roughly nine times their respective estimated earnings, compared with a multiple of nearly 16 times for food group Unilever (ULVR.L) (UNc.AS), 13.7 for utility Scottish and Southern Energy (SSE.L) or 15 for British American Tobacco (BATS.L).

Record high oil is already dragging on economic growth in the United States, Britain and the euro zone, where policymakers have expressed concern about the threat to growth from energy prices.

"If the oil price continues to go high, in the end the danger is it will cause a severe global downturn...Slowly and surely demand gets destroyed," Morton said.

"I'd much rather, for everybody's sake, see the oil price come down to somewhere near $80 or 90 as that would take quite a lot of pressure off equities." With the prospect of a weakening economy, Morton steers clear of financials and other consumer-related sectors such as housebuilders and retailers.

His favourite areas include relatively safe defensive sectors such as utilities and tobaccos, with Scottish & Southern Energy, British American Tobacco and National Grid (NG.L) featuring among his top ten holdings.

(Editing by Erica Billingham)