London midday: Equities boosted by OPEC's plans to limit production

London stocks rallied on Thursday following news that OPEC has agreed a deal to limit production for the first time since 2008.

OPEC ministers agreed during a meeting in Algeria on Wednesday to cut production to between 32.5m and 33m barrels a day, down from August output levels of 33.5m barrels. Further details of the agreement will be discussed at the next meeting on 30 November.

Oil and gas stocks were the biggest risers on the FTSE 350, including Royal Dutch Shell, BHP Billiton, BP and Tullow Oil.

While equities were given a boost by the OPEC news, oil prices fell with Brent crude down 0.74% to $48.33 per barrel and West Texas Intermediate down 0.42% to $46.85 per barrel at 1133 BST.

“That’s not only because OPEC is a notoriously fickle and unreliable institution – in other words, it’s not the first time that the market has heard promises of some kind of cap – but that the new daily output range is more like a freeze than an actual cut in production,” said Connor Campbell, financial analyst at Spreadex.

“This admittedly hasn’t stopped the commodity sector as a whole celebrating the deal that was revealed following OPEC’s side-line meetings at the International Energy Forum in Algiers.”

On the data front, the Bank of England revealed UK mortgage approvals fell to 60,058 in August from 60,925 in July - not quite as much as the consensus forecast of 59,800 but down over 17% from the peak of over 73,000 in January.

Yet last month consumer credit lending rose to £1.6bn after the dip to an 11-month low of £1.2bn in July. Annual growth in lending to corporates also picked up to 4.0% in August from 3.8% in July, contributing to an increase in the MPC’s preferred measure of bank lending to 6.6% from 6.5%.

Shares of housebuilders were in the red after the report, including Barratt Developments, Persimmon and Taylor Wimpey.

The data was released after the BoE's Prudential Regulation Authority (PRA) on Thursday launched a series of affordability checks and interest rate “stress tests” that will be introduced from January 2017.

Buy-to-let lenders will need to verify that landlords can afford to pay the mortgage under potential future interest rates of 5.5% and the PRA recommended that the interest coverage ratio, a commonly used measure of the ratio of rental income to mortgage payments, does not fall below 125%.

Elsewhere, a report showed eurozone economic sentiment rose more than expected in September. The European Commission’s economic sentiment index edged up to 104.9 in September from 103.5 in August, beating expectations for an unchanged reading.

German unemployment rose by1,000 in September, surprising analysts who had expected a decline of 5,000 and following a 6,000 drop in August. The unemployment rate held at 6.1%, as anticipated.

German inflation data is due at 1300 BST. In the US, the final estimate of second quarter gross domestic product will be released at 1330 BST. At the same time initial jobless claims and wholesale inventories will be published, followed by pending home sales at 1500 BST.

A batch of Federal Reserve officials are due to speak later including Philadelphia Fed President Patrick Harker, Atlanta Fed President Dennis Lockhart, Fed governor Jerome Powell and Fed President Neel Kashkari.

Fed chair Janet Yellen also addresses a minority banking conference via video link at 2100 BST, a day after her testimony before the House Financial Services Committee.

In company news, leisure operator Merlin Entertainments pushed lower after it reported growth in revenue in the year to date but highlighted still-challenging trading.

Outsourcer Capita tumbled as it warned that full-year profits will be some way short of current forecasts after its third quarter was hit by a slowdown in some areas, one-off costs and recent hesitation among clients.

Babcock slumped as it felt the impact of the sector turmoil around fellow outsourcer Capita's profit warning.

On the upside, tobacco maker Imperial Brands rose after saying it is on track to meet full-year expectations at constant currency and exchange rates as it reported growth from its US acquisitions.

Plastic product design and engineering company RPC Group was on the front foot after it said it expects revenues and adjusted operating profit to be significantly ahead of the previous year.

Science and engineering group QinetiQ nudged higher after maintaining its expectations for the year.

Market Movers

FTSE 100 (UKX) 6,926.60 1.13%
FTSE 250 (MCX) 17,883.63 0.51%
techMARK (TASX) 3,514.35 0.29%

FTSE 100 - Risers

Royal Dutch Shell 'A' (RDSA) 1,907.00p 5.62%
Royal Dutch Shell 'B' (RDSB) 1,999.50p 5.49%
BHP Billiton (BLT) 1,145.50p 4.42%
BP (BP.) 450.85p 4.30%
Anglo American (AAL) 962.40p 4.19%
Centrica (CNA) 231.80p 3.34%
Sky (SKY) 909.50p 3.06%
Glencore (GLEN) 215.40p 2.89%
Rio Tinto (RIO) 2,596.50p 2.81%
SSE (SSE) 1,584.00p 2.66%

FTSE 100 - Fallers

Capita (CPI) 699.50p -26.56%
Merlin Entertainments (MERL) 446.00p -5.03%
Babcock International Group (BAB) 1,045.00p -3.86%
Barratt Developments (BDEV) 480.70p -2.61%
Taylor Wimpey (TW.) 151.20p -1.63%
Persimmon (PSN) 1,777.00p -1.61%
easyJet (EZJ) 1,015.00p -1.55%
International Consolidated Airlines Group SA (CDI) (IAG) 393.80p -1.30%
Burberry Group (BRBY) 1,371.00p -1.15%
Whitbread (WTB) 3,853.00p -1.05%

FTSE 250 - Risers

Tullow Oil (TLW) 238.90p 9.29%
Hunting (HTG) 447.30p 6.40%
Amec Foster Wheeler (AMFW) 575.00p 5.99%
Allied Minds (ALM) 329.50p 5.41%
Vedanta Resources (VED) 595.00p 5.31%
Kaz Minerals (KAZ) 221.70p 5.27%
Weir Group (WEIR) 1,653.00p 5.22%
Cairn Energy (CNE) 189.50p 4.81%
Riverstone Energy Limited (RSE) 1,122.00p 4.37%
Petrofac Ltd. (PFC) 873.00p 4.24%

FTSE 250 - Fallers

Thomas Cook Group (TCG) 68.55p -4.59%
Serco Group (SRP) 128.60p -3.02%
Softcat (SCT) 320.90p -2.76%
G4S (GFS) 225.60p -2.72%
Marshalls (MSLH) 280.30p -2.61%
Redrow (RDW) 392.90p -2.53%
IG Group Holdings (IGG) 862.50p -2.49%
Crest Nicholson Holdings (CRST) 441.90p -2.45%
Essentra (ESNT) 496.40p -2.19%
Carillion (CLLN) 253.30p -2.13%