London close: Banks weaken ahead of BoE stress tests

Stocks in London fell on Monday, dragged lower by weakness in the banking sector, as investors continued to keep an eye on oil ahead of the Organization of Petroleum Exporting Countries meeting later in the week.

At the closing bell, the FTSE 100 was down 0.6% or 41.28 points at 6,799.47.

In terms of sectors, bank stocks were on the back foot ahead of the Bank of England’s stress tests on Wednesday, with RBS, Lloyds, Barclays, HSBC and Standard Chartered all in the red.

The Bank of England was scheduled to publish the results of its 2016 bank stress tests on Wednesday, alongside its biannual Financial Stability Report.

Some lenders might be set to fail this year because the tests had been made harder, Samuel Tombs, chief UK economist at Pantheon Macroeconomics said. To take note of, recent market events such as the large drop in the value of Sterling since Brexit had not been taken into account, Tombs added.

The 2016 edition of the BoE´s tests assessed whether lenders could survive a 10% drop in the UK´s gross domestic product when compared with the BoE´s own baseline forecasts, together with a jump in the unemployment rate to 9.5%.

Sharp falls in Italian bank stocks – amid concerns the country’s upcoming referendum on constitutional reform could precipitate the fall of Prime Minister Renzi’s government – also weighed on UK peers.

Meanwhile, crude oil futures had bounced back vigorously, with Brent crude up 2.64% to $48.52 a barrel.

Prices had fallen sharply on Friday after Saudi Arabia said it wouldn’t meet with non-OPEC Russia ahead of the cartel's summit in Vienna as originally planned.

However, on Monday afternoon Iraqi oil minister Jabar Ali al-Luaibi said he was "optimistic" that OPEC would be able to reach a deal when it met on Wednesday.

IG’s Chris Beauchamp said: “It’s hard to feel sorry for OPEC, since they always seem to be the authors of their own misery. Having studiously managed, against all expectations, to get their ducks in a row and agree to some outwardly-impressive production freezes, they have now apparently blown apart this tenuous consensus.

“Rising oil prices thanks to the freeze have convinced some that the bad times are over, and that now they can go back to the good old days of arguing over market share. If they fail to come up with a new deal this week, OPEC will have, once again, snatched defeat from the jaws of victory.”

Elsewhere, JD Sports Fashion rallied as it acquired outdoor pursuits retail chain Go Outdoors for £128.3m from owners that include private equity group 3i.

Antofagasta edged higher after agreeing to sell the Michilla mine to Chilean mining group Haldeman Mining Company for up to $52m following the closure of the mine at the end of last year.

Aberdeen Asset Management retreated even after its annual results printed in line with expectations and the company maintained its dividend.

Homewares retailer Dunelm ticked up after agreeing to buy the assets of the WS Group – which owns Worldstores, Achica and Kiddicare – for £8.5m.

Capital & Counties Properties was also on the front foot as it said it is on track to hit its estimated rental value target of £100m at Covent Garden by December next year as leasing activity has been positive.

Grainger advanced after agreeing to buy a private rented sector build-to-rent development in Bristol for £45.7m.

On the downside, Tesco fell following a report in The Times that investigators are looking into whether Tesco Bank ignored a warning about a security flaw in its payment system that allowed fraudsters to steal millions of pounds from the accounts of thousands of its customers.

Market Movers

FTSE 100 (UKX) 6,799.47 -0.60%
FTSE 250 (MCX) 17,518.34 -0.48%
techMARK (TASX) 3,276.64 -0.80%

FTSE 100 - Risers

Randgold Resources Ltd. (RRS) 5,965.00p 4.28%
Fresnillo (FRES) 1,278.00p 3.73%
Polymetal International (POLY) 769.50p 3.22%
Centrica (CNA) 209.00p 2.60%
SSE (SSE) 1,495.00p 2.12%
United Utilities Group (UU.) 907.50p 1.45%
Bunzl (BNZL) 2,065.00p 1.13%
Rolls-Royce Holdings (RR.) 672.50p 0.98%
Intertek Group (ITRK) 3,250.00p 0.96%
Severn Trent (SVT) 2,231.00p 0.90%

FTSE 100 - Fallers

Next (NXT) 4,820.00p -2.65%
Royal Bank of Scotland Group (RBS) 196.20p -2.63%
BT Group (BT.A) 350.30p -2.38%
Sky (SKY) 769.00p -2.29%
CRH (CRH) 2,658.00p -1.96%
Burberry Group (BRBY) 1,408.00p -1.95%
Paddy Power Betfair (PPB) 8,440.00p -1.92%
Vodafone Group (VOD) 195.25p -1.86%
Royal Dutch Shell 'B' (RDSB) 2,072.00p -1.85%
Schroders (SDR) 2,819.00p -1.74%

FTSE 250 - Risers

Capital & Counties Properties (CAPC) 285.60p 8.06%
JD Sports Fashion (JD.) 332.50p 4.10%
AO World (AO.) 171.00p 3.64%
CYBG (CYBG) 280.60p 3.28%
Hochschild Mining (HOC) 215.50p 3.01%
Thomas Cook Group (TCG) 82.35p 2.43%
Marston's (MARS) 135.70p 2.26%
Centamin (DI) (CEY) 131.90p 2.09%
Lancashire Holdings Limited (LRE) 650.00p 1.96%
Pennon Group (PNN) 833.00p 1.96%

FTSE 250 - Fallers

Man Group (EMG) 118.10p -4.60%
Pets at Home Group (PETS) 213.40p -4.45%
Evraz (EVR) 243.80p -4.16%
Laird (LRD) 144.80p -4.11%
Aberdeen Asset Management (ADN) 274.80p -3.95%
International Personal Finance (IPF) 278.90p -3.69%
Ashmore Group (ASHM) 284.70p -3.62%
Halma (HLMA) 936.50p -3.45%
Inmarsat (ISAT) 709.00p -3.41%
Debenhams (DEB) 55.00p -3.00%