LONDON MARKETS: FTSE 100 Stumbles As OPEC Fears Slam Oil Stocks
29 November 2016 - 4:30AM
Dow Jones News
By Sara Sjolin, MarketWatch
Oil choppy as Saudi Arabia pulls out of Monday meeting
U.K. stocks dropped for the first time in three sessions on
Monday, with oil producers among the biggest decliners on growing
concerns OPEC will fail to reach an output deal at a closely
watched meeting this week.
The FTSE 100 index slumped 0.6% to close at 6,799.47.
The downbeat sentiment came as traders looked ahead to the
Organization of the Petroleum Exporting Countries meeting in Vienna
on Wednesday. The big question is whether the 14 cartel members
will agree on an output freeze or cut, which is seen as a way to
stabilize the oil market and send prices higher.
See also: OPEC deal in doubt, and that means $30 oil -- analysts
react to latest developments
(http://www.marketwatch.com/story/opec-deal-in-doubt-and-that-means-30-oil-analysts-react-to-latest-developments-2016-11-28)
Hopes that a deal will be hammered out have faded after OPEC
kingpin Saudi Arabia said it won't meet with Russia
(http://www.marketwatch.com/story/saudi-arabia-wont-attend-pre-opec-meeting-with-russia-others-2016-11-28)
and other non-OPEC producers at a meeting on Monday. The move sent
crude prices down 4% on Friday, and oil initially traded lower on
Monday, adding pressure on the U.K.'s oil companies, but then
erased losses
(http://www.marketwatch.com/story/crude-remains-under-pressure-after-saudis-back-out-of-russia-meeting-2016-11-28).
Shares of BP PLC (BP.LN) (BP.LN) lost 0.6%, while Royal Dutch
Shell PLC (RDSB.LN) (RDSB.LN) fell 1.9%. Outside, the main
benchmark, shares of Tullow Oil PLC (TLW.LN) dropped 1.3%.
"As per usual it's all about who will have do the business of
cutting or capping output, with both Iran and Iraq reluctant to cut
or cap too much, while Russia has paid lip service to a production
freeze only," said Michael Hewson, chief market analyst at CMC
Markets, in a note.
"Without an agreement from these three any prospect of a deal is
dead in the water, and while no one will want to do Saudi Arabia
any favors, if there is no deal oil prices could fall further, and
back below the July lows just above $40 a barrel," he added.
Other movers: Banks were also on the decline ahead of the Bank
of England's stress results due on Wednesday.
Shares of Royal Bank of Scotland Group (RBS.LN) (RBS.LN) dropped
2.6%, Barclays PLC (BCS) (BCS) slipped 1.7%, and Lloyds Banking
Group (LLOY.LN) fell 1.6%.
"Royal Bank of Scotland is the biggest concern given it
struggled in the European Banking Authority health check earlier in
the summer, and it also has the prospect of a rather large fine
hanging over it from U.S. regulators, in relation to mortgage
backed securities, similar to Deutsche Bank," Hewson said.
Standard Chartered PLC (STAN.LN) gave up 0.7%. Reuters reported
on Monday that the Asia-focused bank is set to cut about 10%
(http://www.reuters.com/article/us-stanchart-redundancies-idUSKBN13N0NB)
of its global corporate and institutional banking staff.
On a more upbeat note, precious-metals producers rose as gold
and silver rallied roughly 1%.
Shares of Polymetal International PLC (POLY.LN) added 3.2%,
Randgold Resources Ltd. (RRS.LN)(RRS.LN) gained 4.3% and Fresnillo
PLC (FRES.LN) climbed 3.7%.
There were no major economic reports for the U.K. due on
Monday.
(END) Dow Jones Newswires
November 28, 2016 12:15 ET (17:15 GMT)
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