London close: Stocks led lower by banks amid Deutsche Bank worries

London's top flight index closed in the red on Tuesday as oil prices slumped and worries over the future of Deutsche Bank weighed on the banking sector.

Oil prices were under pressure after Saudi Arabia played down expectations for a deal on oil production, with energy minister Khalid al-Falih calling the OPEC meeting in Algeria this week “consultative”.

Iran’s oil minister Bijan Zanganeh also dashed hopes that an agreement can be made after saying “it is not the time for decision-making”.

Brent crude dropped 3.4% to $45.77 per barrel and West Texas Intermediate fell 3.4% to $44.40 per barrel at 1625 BST.

Meanwhile, banking stocks were under the cosh amid concerns about Deutsche Bank’s legal troubles in the US. The lender tried to reassure investors it has enough cash to pay the $14bn fine from the US Department of Justice for mis-sold mortgage-backed securities.

On Monday, the stock tanked as Chancellor Angela Merkel ruled out any state aid for the bank, which then responded by saying it would solve its problems on its own.

Elsewhere, investors continued to assess the first US presidential debate on Monday. Markets appeared to declare Clinton the winner of the debate as she went on the offensive against Trump, citing his controversial comments about women and attacking the non-release of his tax returns.

In economic data, the Confederation of British Industry revealed British retail sales fell unexpectedly in September. The retail sales balance dropped to -8 in September from a six-month high of +9 in August, missing expectations for a reading of +5.

In the US, Markit’s flash services purchasing managers’ index printed at 51.9 in September from 51.0 in August, beating forecasts for a reading of 51.1. A reading above 50 indicates expansion in the industry.

This marked the fastest monthly rise in activity since April, albeit still relatively modest.

Adjusted for seasonal influences, the flash US Composite PMI Output Index ticked up to 52.0 in September from 51.5 in August.

A gauge US consumer confidence rose in September to a new high. The Conference Board’s consumer confidence index increased to a seasonally adjusted 104.1 in September from an upwardly revised 101.8 in August, beating expectations of 99.0.

Among corporate stocks, banks – including Barclays, Royal Bank of Scotland and Standard Chartered - were led lower by Deutsche Bank's woes.

Standard Chartered was also dragged down by a report that the bank came under investigation from US authorities due to alleged misconduct on the part of management at the Indonesian power company controlled by the lender.

RBS has also warned over the sale of its Williams & Glyn unit. According to Bloomberg, RBS’ chief executive Ross McEwan said at a conference organised by Bank of America-Merrill Lynch in London that the bank may fail to sell the division to a rival lender by the end of this year.

Builders merchant Wolseley slumped after saying it will cut 800 jobs and close 80 stores in a bid to save money, despite reporting a jump in profit and revenue for the year to the end of July.

Mitie was under the cosh after Investec downgraded it to ‘hold’ from ‘buy’ and slashed the price target to 188p from 360p as it pointed to the outsourcer’s uncertain outlook.

On the upside, Carnival gained a day after the cruise line operator lifted its earnings guidance for the year and reported a jump in profit in the latest quarter.

United Utilities was on the front foot after the water company said it expects revenue for the first half of this year to be slightly lower than the same period last year, but underlying operating profit to be marginally higher.

Sky was in the black after Kepler Cheuvreux upgraded the stock to ‘buy’ from ‘hold’ saying its discounted cash flow-based fair value of 1,100p suggests nearly 30% upside from current levels, which is the highest in its large-cap media universe.

Card Factory rallied after announcing a special dividend as it reported a rise in revenue and profit for the six months to the end of July.

Market Movers

FTSE 100 (UKX) 6,799.83 -0.27%
FTSE 250 (MCX) 17,615.83 -0.60%
techMARK (TASX) 3,473.76 -0.35%

FTSE 100 - Risers

Carnival (CCL) 3,726.00p 4.81%
Pearson (PSON) 749.50p 3.24%
Sky (SKY) 847.50p 1.56%
Barratt Developments (BDEV) 484.20p 1.53%
Ashtead Group (AHT) 1,219.00p 1.50%
TUI AG Reg Shs (DI) (TUI) 1,086.00p 1.50%
HSBC Holdings (HSBA) 577.10p 1.39%
National Grid (NG.) 1,093.50p 1.34%
Merlin Entertainments (MERL) 468.90p 1.25%
InterContinental Hotels Group (IHG) 3,135.00p 1.19%

FTSE 100 - Fallers

Standard Chartered (STAN) 610.10p -2.49%
Royal Dutch Shell 'B' (RDSB) 1,882.50p -2.21%
Royal Dutch Shell 'A' (RDSA) 1,800.50p -2.09%
Randgold Resources Ltd. (RRS) 7,745.00p -1.96%
Capita (CPI) 951.50p -1.96%
London Stock Exchange Group (LSE) 2,797.00p -1.65%
Royal Bank of Scotland Group (RBS) 174.60p -1.63%
GKN (GKN) 317.90p -1.58%
Wolseley (WOS) 4,233.00p -1.56%
Standard Life (SL.) 337.00p -1.55%

FTSE 250 - Risers

Virgin Money Holdings (UK) (VM.) 314.50p 5.32%
Card Factory (CARD) 310.50p 2.78%
DFS Furniture (DFS) 256.80p 2.43%
Ladbrokes (LAD) 140.40p 2.03%
Softcat (SCT) 326.50p 1.84%
CYBG (CYBG) 255.40p 1.75%
Polypipe Group (PLP) 278.50p 1.61%
Ashmore Group (ASHM) 343.20p 1.48%
Kier Group (KIE) 1,324.00p 1.46%
Inmarsat (ISAT) 688.00p 1.18%

FTSE 250 - Fallers

Aldermore Group (ALD) 166.90p -4.46%
AA (AA.) 285.00p -3.98%
Hunting (HTG) 414.10p -3.92%
Tullow Oil (TLW) 216.00p -3.44%
Hill & Smith Holdings (HILS) 1,120.00p -3.20%
Inchcape (INCH) 637.00p -3.12%
Cairn Energy (CNE) 177.80p -3.00%
Saga (SAGA) 212.30p -2.93%
IP Group (IPO) 167.50p -2.84%
Essentra (ESNT) 497.80p -2.77%