London close: FTSE closes lower as oil prices plunge ahead of OPEC meeting

The FTSE 100 closed in the red on Tuesday as oil prices retreated on doubts OPEC will reach a deal to curb production at a meeting in Vienna.

London’s top tier index fell 0.40% to 6,772 points.

Brent crude plunged 4.7% to $46.05 per barrel and West Texas Intermediate slumped 4.7% to $44.96 per barrel at 1641 GMT.

Indonesia’s energy minister told reporters in Vienna that he’s “not optimistic” that OPEC will reach a deal at its meeting on Wednesday.

IG market analyst Joshua Mahony said: “As we approach tomorrow’s crucial OPEC meeting, the impact of an increasingly volatile crude market will play a significant part in dictating sentiment throughout financial markets.

He added: “Despite an initial consensus, a deal feels as far away as ever, with members continuing to conduct an intricate game of political poker, utilising the media to further their cause.

“It is becoming increasingly evident that some of the more prominent OPEC members care more about holding on to market share than helping raise the price of oil. Hence, despite agreeing to a production cut, we have seen the likes of Saudi Arabia, Iraq and Iran all continue to raise production.”

Investors are also cautious ahead of Italy’s referendum on Sunday. Italians will be asked to decide whether to accept a package of constitutional reforms put forward by centre-left Prime Minister Matteo Renzi, who has said he would resign if the proposals are rejected.

Market participants are concerned that if this results in a 'no' vote, political uncertainty will ensue, making the task of sorting out non-performing loan issues at the country’s banks even more difficult.

In economic data, UK mortgage approvals and levels of unsecured consumer credit rose more than expected in October, according to the Bank of England.

The BoE said that 67,518 mortgages for house purchases had been approved last month, up from 63,594 in the preceding month and August's 18-month low of 61,381, as well as topping the 65,000 consensus forecast. Total consumer credit rose to £1.62bn in October, from £1.48bn the month before and above the £1.50bn consensus estimate.

Stateside, the Commerce Department raised its estimate on third quarter US economic growth. Gross domestic product grew at an annual rate of 3.2%, up from an earlier estimate of 2.9% and beating consensus expectations for 3% growth. This compared to 1.4% in the second quarter and marked the strongest reading in two years.

In the Eurozone, the European Commission’s headline economic sentiment index edged up to 106.5 in November from a revised 106.4 in October, missing economists’ expectations for a reading of 107.0.

The EC said the virtually unchanged sentiment resulted from a mild deterioration in industry confidence and stable readings in services, which offset more upbeat assessments of construction and retail trade managers, as well as consumers.

In corporate news, oil producers were under pressure on the drop in crude prices including BHP Billiton, BP and Royal Dutch Shell.

A fall in metals prices, led by copper, saw investors migrate out of Antofagasta, Fresnillo, BHP Billiton, Rio Tinto, Anglo American and Randgold.

Healthcare provider Mediclinic edged lower after Jefferies cut its target price on the stock to 741p from 812p.

BT Group recovered from earlier losses arising from Ofcom's ruling that it must legally separate from its Openreach infrastructure arm due to its failure to satisfy the regulator's competition concerns.

BT made a move late on Monday to try and prevent the enforced spin-off with the appointment of a former director of the telecoms regulator, Mike McTighe, as chairman of Openreach.

FTSE 250 real estate investment trust Shaftesbury slipped after it posted a drop in profit for the year to the end of September but a rise in revenue, and expressed confidence in its outlook.

On the upside, housebuilders rallied on the back of the positive BoE data on mortgage approvals. Shares in Persimmon, Taylor Wimpey and Barratt Developments gained.

Pork and poultry producer Cranswick advanced after reporting a jump in first-half pre-tax profit and revenue.

Market Movers

FTSE 100 (UKX) 6,772.00 -0.40%
FTSE 250 (MCX) 17,532.06 0.08%
techMARK (TASX) 3,275.19 -0.04%

FTSE 100 - Risers

ITV (ITV) 171.20p 2.70%
Next (NXT) 4,936.00p 2.41%
Micro Focus International (MCRO) 2,129.00p 2.31%
Barratt Developments (BDEV) 476.10p 2.28%
Taylor Wimpey (TW.) 149.40p 2.05%
Persimmon (PSN) 1,723.00p 1.89%
Royal Mail (RMG) 464.60p 1.84%
Dixons Carphone (DC.) 335.40p 1.79%
Ashtead Group (AHT) 1,511.00p 1.75%
International Consolidated Airlines Group SA (CDI) (IAG) 444.50p 1.74%

FTSE 100 - Fallers

Antofagasta (ANTO) 696.00p -4.46%
Fresnillo (FRES) 1,234.00p -3.44%
BHP Billiton (BLT) 1,313.50p -3.03%
Mediclinic International (MDC) 703.00p -2.70%
Anglo American (AAL) 1,204.50p -2.63%
Rio Tinto (RIO) 3,067.00p -2.32%
Royal Dutch Shell 'A' (RDSA) 1,949.00p -2.04%
Randgold Resources Ltd. (RRS) 5,845.00p -2.01%
BP (BP.) 443.25p -1.99%
Royal Dutch Shell 'B' (RDSB) 2,031.50p -1.95%

FTSE 250 - Risers

SSP Group (SSPG) 371.00p 8.54%
BH Macro Ltd. GBP Shares (BHMG) 2,084.00p 6.11%
Go-Ahead Group (GOG) 2,094.00p 3.97%
Laird (LRD) 150.20p 3.73%
Berkeley Group Holdings (The) (BKG) 2,517.00p 3.67%
TalkTalk Telecom Group (TALK) 162.00p 3.12%
Bellway (BWY) 2,484.00p 2.52%
FirstGroup (FGP) 104.70p 2.45%
Tullett Prebon (TLPR) 440.00p 2.33%
Ocado Group (OCDO) 276.70p 2.29%

FTSE 250 - Fallers

AO World (AO.) 162.40p -5.03%
Henderson Group (HGG) 233.40p -3.71%
Hunting (HTG) 495.10p -3.68%
Virgin Money Holdings (UK) (VM.) 307.00p -3.22%
Kaz Minerals (KAZ) 363.90p -2.75%
Weir Group (WEIR) 1,738.00p -2.74%
Ashmore Group (ASHM) 277.00p -2.70%
Aberdeen Asset Management (ADN) 267.80p -2.55%
Countrywide (CWD) 169.80p -2.53%
Tullow Oil (TLW) 262.80p -2.41%