Europe open: Shares up as oil majors benefit from OPEC cuts

European shares edged ahead at the open with oil prices jumping sharply after an unexpected decision to cut crude output, which in turn sparked fears of renewed inflation.

The pan European Stoxx 600 was up 0.16% in early deals, while the oil-heavy UK FTSE 100 outperformed with a 0.63% rise.

West Texas Intermediate soared as much as 8% in early trading and stood above $79 per barrel after oil cartel Opec slashed production by more than 1 million barrels a day, while Brent crude shot up almost 5% to come close to $84.

Saudi Arabia pledged to cut 500,000 daily barrels alone. Russia joined the oil cartel in pledging to reduce production as oil-rich countries try to drive demand.

"The development comes as a blow for inflation, with expectations of inflation coming down partly balancing on the trajectory of the oil price. Markets are aware that if the pressure continues, central banks will need to extend or strengthen their interest-rate hiking cycles, the expectations of which will need to be repriced," said Hargreaves Lansdown analyst Sophie -Lund-Yates.

The news boosted major oil producers, with BP, Shell, Aker BP, Equinor, Galp and ENI all higher.

On the downside, airlines all fell on the prospect of higher costs and reduced demand if inflation was refuelled. British Airways owner IAG, along with low-cost rivals Ryanair and Wizz Air felt the pinch.

Sentiment was also hit by a China manufacturing survey for March showing an unexpected fall in output.

Reporting by Frank Prenesti for Sharecast.com