ADVFN Morning London Market Report: Tuesday 16 Feb 2016

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London open: Stocks edge higher as oil prices rise

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London stocks gained on Tuesday as oil prices rose and investors looked ahead to UK inflation data.

Oil prices advanced in morning trade following reports that Saudi Arabia’s oil minister will meet with his Russian counterpart in Doha later on Tuesday to address the crisis in the sector. An oversupplied market and weak demand has been pushing crude prices lower.

“Assuming these reports are accurate, it would appear that there was actually some substance to suggestions by the UAE energy minister last week that OPEC is open to discussing (production) cuts, which given the number of false claims prior to this, actually comes as a surprise,” said Craig Erlam, senior market analyst at Oanda.

Brent crude jumped 5.2% to $35.23 per barrel and West Texas Intermediate increased 3.9% to $30.95 per barrel at 0855 GMT.

In the UK, the Office for National Statistics publishes its inflation report at 0930 GMT which is expected to reveal weaker figures for January. The consumer price index is forecast to fall 0.7% month-on-month compared to a 0.1% increase in December. On the year, CPI is projected to grow 0.3% in January, down from 0.2% in December.

Inflation remains well below the Bank of England’s 2% target amid falling oil prices and a supermarket price war.

In China, data showed banks extended 2.51trn yuan of new loans in January, beating analysts’ estimates of 19.0trn yuan. The previous month banks granted 597.8bn yuan of new loans. The growth suggests Beijing is keeping monetary policy loose to turn around the economic slowdown.

Across the Atlantic, the pace is set to pick up as the US equities market returns to trading after closing on Monday for President’s Day.

Corporate-wise, Anglo American’s shares declined as the miner posted a pre-tax loss of $5.5bn after $3.8bn of write-downs since the half year, as it unveiled its promised “radical” overhaul of the business to counter crumbling commodity prices, with more than 6,500 job cuts expected.

Oil producers, including Royal Dutch Shell and BP, rallied on the increase in crude prices.

Randgold Resources and Fresnillo were top fallers on the FTSE 100 as gold and silver prices plunged 3.28% and 3.77%, respectively on the Comex.

Fidessa Group dropped as it reported flat pre-tax profit for the full year amid volatile conditions in financial markets.

Vodafone edged lower as the company and Liberty Global agreed to combine their operations in the Netherlands.

Mondi climbed as it said it expected full year underlying operating profits to be higher than the €767m achieved in 2014.

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