London close: Stocks recover as oil prices waver after Doha meeting

The FTSE 100 ended higher on Monday, recovering from earlier declines as crude oil futures bounced back from the steep losses seen at the start of trading.

Oil prices were under pressure throughout most of the session after members and non-members of the Organization of the Petroleum Exporting Countries failed to come to an agreement to freeze oil production at a meeting in Doha on Sunday.

The talks fell apart after Saudi Arabia reiterated that it would not cap output unless Iran agreed to do the same. Iran, which did not attend the negotiations, has been reluctant to come to such an agreement since it has recently been relieved of sanctions.

“This string of events almost suggests that the major players in the cartel had no real intention of curbing production, but simply exploited the explosive levels of volatility to manufacture speculative boosts in prices based on false expectations,” said FXTM research analyst Lukman Otunuga.

In more uplifting news, Kuwait’s crude production dropped more than half on Sunday as thousands of its oil industry employees began an open-ended strike over government plans to cut wages. The nation’s output was 1.1 million barrels a day, down from the usual 3 million it produces.

"Since we had not factored in any significant effect from a production freeze accord in our recent oil price forecast, the failed Doha talks do not alter our outlook for the oil price. We still look for the price of Brent crude to average $46/bl in Q4 16 and $52/bl in 2017 on the back of a lower USD, stronger global economic activity and a decline in non-OPEC oil output," Jans Naervig Pedersen, Senior Analyst at Danske Bank, said in a note sent to clients.

At 1656 BST Brent crude rebounded 0.32% to $43.24 per barrel and West Texas Intermediate dropped 0.64% to $40.10 per barrel, having traded lower by about 6% at the start of the session.

Three-month copper futures closed 0.9% higher at $4,822.50 per metric tonne on the LME, alongside gains of 2.3% and 1.7% for nickel and zinc.

Meanwhile, the Treasury has warned in an analysis that the UK economy would be 6% smaller by 2030 if Britons voted to leave the EU. Chancellor George Osborne added that this would be the equivalent of £4,300 per household. The country is due to vote on “in/out” referendum on June 23.

He said the poorest households would be hit hardest.

"They are the people whose incomes would go down, whose house prices would fall, whose job prospects would weaken, they are the people who always suffer when the country takes an economic wrong turn," he told the BBC.

In macroeconomic data, asking prices for homes in England in Wales reached a record high of £307,033 in April, up 1.3% month-on-month, Rightmove revealed.

US homebuilders’ confidence held steady in April. The National Association of Home Builders/Wells Fargo builder sentiment index was unchanged at 58, missing forecasts for a reading of 59.

Miners pace gains

On the corporate front, shares in miners such as Anglo American, BHP and commodities trader Glencore paced gains as the prices of several key industrial metals bounced back and a leading commodities strategist said that for the first time in three years probabilities around a base-case were shifting to the bullish rather than the bearish side. "Commodity markets are stumbling to normalcy. Across commodities, cost curves are stabilizing and supply/demand fundamentals are moving toward equilibrium if not deficit," Citi's global commodities team led by Ed Morse said in a research note sent to clients.

Travel and leisure shares rallied as Berenberg said the sell off after terror attacks in Tunisia, Egypt, Turkey, Paris and Brussels had been overdone and Britons would not be dissuaded from taking an overseas break this summer. TUI, easyJet, Carnival and Intercontinental Hotels all rose on the news.

Centrica slipped on news domestic customer numbers fell 1.5% in the first three months of the year as households switched to other providers.

Insurer Lancashire Holdings was higher after Citigroup upgraded the stock to ‘buy’ from ‘neutral’.

Centamin was in the black despite a downgrade to ‘neutral’ from ‘buy’ by Citigroup, as Numis lifted its price target on the stock 110p from 100p.

Beazley was on the back foot, with Lloyd’s of London insurers under pressure after the earthquake in Japan. Peel Hunt said the Lloyd's insurers are likely to be exposed to commercial and industrial losses following a major earthquake in the southern Japanese island of Kyushu on 16 April.

Market Movers

FTSE 100 (UKX) 6,353.90 0.16%
FTSE 250 (MCX) 16,889.75 -0.12%
techMARK (TASX) 3,171.99 -0.09%

FTSE 100 - Risers

BT Group (BT.A) 454.90p 2.45%
TUI AG Reg Shs (DI) (TUI) 1,066.00p 2.40%
Anglo American (AAL) 694.50p 2.39%
Reckitt Benckiser Group (RB.) 6,868.00p 1.97%
BHP Billiton (BLT) 916.40p 1.82%
Sainsbury (J) (SBRY) 290.00p 1.79%
Rio Tinto (RIO) 2,268.50p 1.70%
Glencore (GLEN) 158.05p 1.54%
DCC (DCC) 6,285.00p 1.45%
InterContinental Hotels Group (IHG) 2,900.00p 1.36%

FTSE 100 - Fallers

ARM Holdings (ARM) 955.00p -3.54%
Antofagasta (ANTO) 458.10p -2.74%
Centrica (CNA) 234.60p -1.55%
Carnival (CCL) 3,680.00p -1.55%
Aviva (AV.) 435.40p -1.23%
Dixons Carphone (DC.) 408.40p -1.19%
Provident Financial (PFG) 3,050.00p -1.17%
Paddy Power Betfair (PPB) 9,530.00p -1.09%
Intu Properties (INTU) 293.30p -1.08%
Hammerson (HMSO) 579.50p -1.02%

FTSE 250 - Risers

Lancashire Holdings Limited (LRE) 552.00p 3.56%
BGEO Group (BGEO) 2,123.00p 3.06%
McCarthy & Stone (MCS) 256.70p 2.23%
Rank Group (RNK) 253.00p 2.22%
Tullett Prebon (TLPR) 342.00p 2.03%
Dignity (DTY) 2,514.00p 1.74%
JRP Group (JRP) 132.70p 1.69%
Riverstone Energy Limited (RSE) 815.00p 1.62%
Woodford Patient Capital Trust (WPCT) 99.15p 1.59%
Marshalls (MSLH) 340.30p 1.58%

FTSE 250 - Fallers

St. Modwen Properties (SMP) 313.10p -3.48%
Jimmy Choo (CHOO) 126.00p -3.45%
Beazley (BEZ) 320.00p -2.91%
OneSavings Bank (OSB) 288.40p -2.34%
Diploma (DPLM) 745.50p -2.17%
Ashmore Group (ASHM) 293.40p -2.13%
Galliford Try (GFRD) 1,285.00p -2.06%
SSP Group (SSPG) 293.30p -2.04%
Supergroup (SGP) 1,302.00p -1.96%
Laird (LRD) 370.50p -1.83%