Europe open: Stocks edge higher as oil rallies

European stocks edged higher in early trade as oil prices rallied ahead of the OPEC meeting.

At 0850 GMT, the benchmark Stoxx Europe 600 index was up 0.3%, while Germany’s DAX and France’s CAC 40 were 0.6% firmer.

Meanwhile, oil prices rallied amid growing expectations that the members of the Organization of the Petroleum Exporting Countries will be able to agree on a production cut at their meeting in Vienna later.

Oil prices shot up after Iran’s oil minister, Bijan Zanganeh, said he reckoned a deal could be reached, although an immediate freeze by Iran wasn’t on the agenda.

West Texas Intermediate was up 1.9% to $46.08 a barrel and Brent crude was 2.1% firmer at $47.36.

David Morrison, senior market strategist at SpreadCo, said: “Investors remain hopeful that the 14-member cartel will agree production cuts. However, there’s as strong possibility that we get a repeat of the Doha meeting in April which broke up in acrimony with Saudi Arabia and Iran at loggerheads. If so, then we should expect crude to retest support around $40 very soon.

“Even if there is an agreement to cut production (and it will have to be around 1 million barrels per day - just for OPEC) then any significant price rise looks likely to be capped by increased US shale oil output.”

In London, banks were in focus following the results of the Bank of England’s latest stress tests. State-owned Royal Bank of Scotland performed the worst and has been forced to submit plans to raise fresh capital, while rivals Barclays and Standard Chartered failed requirements but will not require extra funds.

RBS failed to pass all the hurdles of the stress test and has agreed a revised capital plan with the Bank of England's Prudential Regulation Authority to raise at least £2bn of extra capital.

RBS shares fell 2.5%, while Barclays nudged up 0.1% and StanChart slipped 0.4%.

Elsewhere, Sage was in the black after the accounting software company’s annual revenues and earnings came in slightly ahead of expectations.

Linde AG shares surged after the company confirmed it has received a revised proposal concerning a potential merger of equals with Praxair.