London close: Stocks rebound as oil prices edge higher

UK stocks rebounded at the closing bell on Wednesday from declines earlier in the session as oil prices swung higher.

Crude futures spent most of the day in negative territory before recovering in the afternoon, with Brent rising 1.5% to $32.30 per barrel and West Texas Intermediate increasing 0.56% to $31.63 per barrel at 1622 GMT.

The gains came on hopes that OPEC and oil producing nations from outside the cartel would join forces to address the oversupply in the market. OPEC and Russian officials reportedly met on Tuesday for talks on possible action to eliminate the supply glut.

Data on Wednesday showing a bigger-than-expected increase in weekly US crude inventories seemed to have little impact on oil prices. Crude oil stockpiles climbed 8.4m barrels to 494.9m barrels in the week ended 22 January, according to the Energy Information Administration. Analysts had predicted a rise of 3.3m barrels on the week.

Meanwhile, investors are bracing for the Federal Open Market Committee’s decision on US interest rates at 1900 GMT. The Fed is expected to keep interest rates unchanged at 0.50% amid worries about risks stemming from the slowdown in emerging economies and falls in oil prices.

With no surprises anticipated, all eyes will be on the accompanying statement for clues on the timing of the next interest rate hike. Last month the Fed decided to raise rates by 25 basis points, marking the first increase in almost a decade.

“Since the previous meeting in December the economic landscape has changed drastically with stock markets, oil prices and global growth forecasts all following a negative trajectory, while economic data from the States have been lacklustre,” said FXTM analyst Lukman Otunuga.

“Fundamentally these factors should dim the prospects of future rate hikes but with ongoing discussions suggesting that the Fed made a mistake by raising US rates in the first place, it seems likely that the minutes may adopt a hawkish bias similar to December in an attempt to retain credibility and prevent further disruption in the financial markets.”

In economic data, a report from Nationwide showed UK house prices rose 4.4% year-on-year in January compared to 4.5% in December. Analysts had pencilled in a 4.7% increase for this month.

The British Bankers’ Association revealed that loans for house purchases in December rose 19% year-on-year to 43,975 but it was lower than the previous month’s 44,533 approvals in November and analysts’ expectations for 45,500 approvals.

In the US, new home sales jumped 10.8% to 544,000 units, compared to analysts’ estimates for a 2% rise to 500,000 units, according to the Commerce Department.

Separately, the Mortgage Bankers Association said mortgage applications rose 8.8% in the week to 22 January.

Among corporate stocks, Royal Bank of Scotland's shares fell after the bank confirmed it will make a loss for 2015 and said it will set aside £500m of PPI provisions, $2.2bn for US residential mortgage-backed securities probes, and £4.2bn into its pension fund .

Sage rallied after reporting a 6.6% rise in revenue for the three months to 31 December, driven by strong software subscription sales.

Dixons Carphone edged up after Investec upgraded the retailer from ‘add’ to ‘buy’, citing an improvement in the company’s core businesses and an increase in market share.

Antofagasta slid as it reported a 10.6% drop in copper production for the full year to 630,300 tonnes, due to lower output at Los Pelambres and Centinela.

Just Eat slumped after Morgan Stanley downgraded the stock to ‘underweight’ from ‘equalweight’ and cut the price target to 390p from 450p.

Britvic gained after reporting a rise in first quarter revenue as it reiterated its full year earnings guidance.

Aberdeen Asset Management jumped after reporting a better-than-expected fall in net outflows in the three months to 31 December 2015. Numis upgraded the stock to ‘buy’ from ‘hold’, saying that emerging market assets will “eventually recover and that with hindsight buying on the valuations available today will prove decent value”.

Market Movers

FTSE 100 (UKX) 5,990.37 1.33%
FTSE 250 (MCX) 16,280.98 0.63%
techMARK (TASX) 3,153.93 1.04%

FTSE 100 - Risers

Sage Group (SGE) 608.00p 7.14%
Glencore (GLEN) 91.63p 5.20%
Compass Group (CPG) 1,166.00p 3.55%
Aberdeen Asset Management (ADN) 240.00p 3.09%
BG Group (BG.) 1,025.00p 3.03%
ITV (ITV) 266.70p 2.58%
Taylor Wimpey (TW.) 189.00p 2.55%
Royal Dutch Shell 'B' (RDSB) 1,456.00p 2.50%
Royal Dutch Shell 'A' (RDSA) 1,456.50p 2.39%
Whitbread (WTB) 3,984.00p 2.39%

FTSE 100 - Fallers

Capita (CPI) 1,141.00p -2.23%
Royal Bank of Scotland Group (RBS) 255.70p -1.99%
ARM Holdings (ARM) 995.50p -1.92%
Shire Plc (SHP) 4,050.00p -1.77%
Burberry Group (BRBY) 1,190.00p -1.73%
Standard Chartered (STAN) 469.10p -1.72%
International Consolidated Airlines Group SA (CDI) (IAG) 552.50p -1.52%
Rolls-Royce Holdings (RR.) 536.50p -1.29%
Sports Direct International (SPD) 412.30p -1.25%
Antofagasta (ANTO) 373.60p -1.16%

FTSE 250 - Risers

CLS Holdings (CLI) 1,663.00p 6.60%
TalkTalk Telecom Group (TALK) 215.80p 6.31%
Britvic (BVIC) 715.50p 5.53%
ICAP (IAP) 473.30p 5.18%
Paragon Group Of Companies (PAG) 329.40p 5.14%
Greggs (GRG) 1,045.00p 5.03%
Jimmy Choo (CHOO) 127.30p 4.95%
IP Group (IPO) 184.10p 4.60%
Rathbone Brothers (RAT) 2,356.00p 4.16%
Ocado Group (OCDO) 272.80p 4.00%

FTSE 250 - Fallers

Just Eat (JE.) 379.40p -9.77%
Evraz (EVR) 60.65p -6.55%
Bwin.party Digital Entertainment (BPTY) 120.20p -4.07%
BGEO Group (BGEO) 1,725.00p -2.87%
Wood Group (John) (WG.) 601.00p -2.75%
Entertainment One Limited (ETO) 151.10p -2.64%
Electrocomponents (ECM) 212.30p -2.53%
Countrywide (CWD) 353.20p -2.43%
BTG (BTG) 590.00p -2.32%
Tullow Oil (TLW) 152.30p -2.31%