LONDON MARKETS: FTSE 100 Ends Higher As OPEC Deal Powers Oil Shares
November 30 2016 - 12:07PM
Dow Jones News
By Carla Mozee, MarketWatch
U.K. stock benchmark breaks string of monthly gains
U.K. stocks strengthened Wednesday, with a deal by OPEC to cut
production prompting gains for energy shares, but Royal Bank of
Scotland PLC's stock declined after the lender failed the Bank of
England's stress test.
The FTSE 100 closed up 0.2% at 6,783.79, but backed off an
intraday increase of 1.1% as basic material, consumer-services and
utility shares were pushed down.
The oil and banking industries were in the spotlight as trading
wrapped up for November. The FTSE 100 closed with monthly decline
of 2.5%, the index's first such loss after five months of gains.
That string was the longest since a 12-month win streak ended in
May 2013.
OPEC: Major oil producers and members of the Organization of the
Petroleum Exporting Countries in Vienna hammered out an agreement
to curb daily oil production by 1.2 million barrels as it tackles
an oversupplied market. That sent prices for Brent crude oil
shooting past $50 a barrel and rallying more than 8%, and West
Texas Intermediate oil futures surging about 9% to top $49 a
barrel.
Follow MarketWatch's OPEC live blog
(http://blogs.marketwatch.com/thetell/2016/11/30/opec-meets-in-vienna-to-hash-out-oil-deal-live-blog/?mod=MW_story_latest_news)
Those moves helped push up London-listed shares of oil producers
BP PLC (BP.LN) (BP.LN) and Royal Dutch Shell PLC (RDSB.LN)
(RDSB.LN) by 3.8% and 4.3%, respectively. Shares in the companies
make up a roughly 15% weighting on the FTSE 100.
"The deal is the first time that OPEC has cut production in
eight years, and for many it has come 12 months too late as lower
oil prices has crippled some economies in that period," said James
Hughes, chief market analyst at GKFX, in a note.
"A failure to finalize a deal would have been terrible for OPEC,
and would show the oil cartel as impotent in the face of record
high output and stubbornly low prices," Hughes added. "So this is
just as much a PR job for OPEC as it is a move to push prices
higher."
(http://www.marketwatch.com/story/opec-oil-meeting-7-things-you-need-to-know-2016-11-28)Stress
tests: Royal Bank of Scotland Group (RBS.LN) (RBS.LN) managed to
close off session lows but still finished the session by ending
down 1.4%. The shares suffered after the bank failed a tougher
stress test of systemic U.K. banks
(http://www.marketwatch.com/story/rbs-fails-bank-of-england-stress-test-to-boost-capital-plan-2016-11-30),
the Bank of England said. RBS must raise around GBP2 billion ($2.5
billion) in capital.
(http://www.marketwatch.com/story/rbs-fails-boe-stress-test-needs-25-bln-capital-2016-11-30)
The process also revealed capital inadequacies at Standard
Chartered PLC and Barclays PLC, but those lenders won't have to
submit new capital plans because they've already undertaken capital
strengthening measures, the BOE said in a statement. Shares of
Standard Chartered (STAN.LN) turned higher and closed up 1.6% and
Barclays (BCS) (BCS) finished up 0.8%.
See: Italy's vote lies in wait for European banks
(http://www.marketwatch.com/story/italys-vote-lies-in-wait-for-european-banks-2016-11-30)
"The key takeaway from the report is that the outlook for
financial stability is challenging [and] Brexit and high levels of
household debt have been cited as the key reasons for this," said
Kathleen Brooks, research director of City Index, in a note.
"On the positive side, the BOE said that the U.K. is well able
to finance its huge current-account deficit, and the banking
system, although not perfect, is in a position to support the U.K.
economy, even in a severely stressed scenario," she said.
In other moves Wednesday, Capita PLC shares (CPI.LN) slid 5.9%
to close at GBP5.25, their lowest settlement since August 2006,
according to FactSet data, after HSBC downgraded the
business-support services provider to a neutral rating.
The pound bought $1.2487, down from $1.2503 late Tuesday in New
York.
Investors on Thursday will receive a November reading on British
manufacturing activity at 9:30 a.m. London time, or 4:30 a.m.
Eastern Time.
(END) Dow Jones Newswires
November 30, 2016 12:52 ET (17:52 GMT)
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