London midday: Stocks drop as banking sector weighs

Stocks in London fell on Monday, dragged lower by weakness in the banking sector, as investors continued to keep an eye on oil ahead of the Organization of Petroleum Exporting Countries meeting later in the week.

At midday, the FTSE 100 was down 0.6% to 6,798.00.

Meanwhile, oil prices were weaker but off lows, with West Texas Intermediate and Brent crude down 0.2% to $45.96 a barrel and $47.16 a barrel, respectively. Prices had fallen sharply on Friday after Saudi Arabia said it wouldn’t meet with non-OPEC Russia ahead of the cartel's summit in Vienna as originally planned.

Saudi Arabia, which is the world’s largest oil producer, said it would not attend the meeting unless there was “a clear decision from OPEC” on production cuts.

However, a report in the Financial Times on Monday suggested Saudi has offered to cut its production by 4.5% from its current level of 10.5m barrels a day. It was also said to have demanded that Iran’s production be frozen at the current level of 3.8m barrels per day.

IG’s Chris Beauchamp said: “It’s hard to feel sorry for OPEC, since they always seem to be the authors of their own misery. Having studiously managed, against all expectations, to get their ducks in a row and agree to some outwardly-impressive production freezes, they have now apparently blown apart this tenuous consensus.

“Rising oil prices thanks to the freeze have convinced some that the bad times are over, and that now they can go back to the good old days of arguing over market share. If they fail to come up with a new deal this week, OPEC will have, once again, snatched defeat from the jaws of victory.”

In terms of sectors, bank stocks were on the back foot ahead of the Bank of England’s stress tests on Wednesday, with RBS, Lloyds, Barclays, HSBC and Standard Chartered all in the red. Sharp falls in Italian bank stocks – amid concerns the country’s upcoming referendum on constitutional reform could precipitate the fall of Prime Minister Renzi’s government – also weighed on UK peers.

Elsewhere, JD Sports Fashion rallied as it acquired outdoor pursuits retail chain Go Outdoors for £128.3m from owners that include private equity group 3i.

Antofagasta edged higher after agreeing to sell the Michilla mine to Chilean mining group Haldeman Mining Company for up to $52m following the closure of the mine at the end of last year.

Aberdeen Asset Management was a high riser after its annual results were in line with expectations and the company maintained its dividend.

Homewares retailer Dunelm ticked up after agreeing to buy the assets of the WS Group – which owns Worldstores, Achica and Kiddicare – for £8.5m.

Capital & Counties Properties was also on the front foot as it said it is on track to hit its estimated rental value target of £100m at Covent Garden by December next year as leasing activity has been positive.

Grainger advanced after agreeing to buy a private rented sector build-to-rent development in Bristol for £45.7m.

On the downside, Tesco fell following a report in The Times that investigators are looking into whether Tesco Bank ignored a warning about a security flaw in its payment system that allowed fraudsters to steal millions of pounds from the accounts of thousands of its customers.

Market Movers

FTSE 100 (UKX) 6,789.37 -0.75%
FTSE 250 (MCX) 17,476.80 -0.72%
techMARK (TASX) 3,276.81 -0.80%

FTSE 100 - Risers

Centrica (CNA) 210.30p 3.04%
Polymetal International (POLY) 759.00p 1.81%
Fresnillo (FRES) 1,252.00p 1.62%
Randgold Resources Ltd. (RRS) 5,810.00p 1.57%
SSE (SSE) 1,487.00p 1.57%
United Utilities Group (UU.) 906.50p 1.34%
Glencore (GLEN) 286.80p 1.24%
Intertek Group (ITRK) 3,256.00p 1.15%
British American Tobacco (BATS) 4,466.00p 1.02%
Severn Trent (SVT) 2,232.00p 0.95%

FTSE 100 - Fallers

Sky (SKY) 766.50p -2.60%
Marks & Spencer Group (MKS) 326.50p -2.60%
Royal Bank of Scotland Group (RBS) 196.30p -2.58%
Next (NXT) 4,832.00p -2.40%
Paddy Power Betfair (PPB) 8,410.00p -2.27%
Lloyds Banking Group (LLOY) 57.50p -2.16%
easyJet (EZJ) 1,000.00p -1.96%
Dixons Carphone (DC.) 325.80p -1.87%
London Stock Exchange Group (LSE) 2,776.00p -1.80%
Royal Dutch Shell 'B' (RDSB) 2,073.00p -1.80%

FTSE 250 - Risers

Domino's Pizza Group (DOM) 359.40p 3.60%
JD Sports Fashion (JD.) 330.60p 3.51%
CYBG (CYBG) 280.20p 3.13%
Capital & Counties Properties (CAPC) 271.10p 2.57%
Pennon Group (PNN) 829.50p 1.53%
Telecom Plus (TEP) 1,231.00p 1.40%
Ted Baker (TED) 2,635.00p 1.39%
Paragon Group Of Companies (PAG) 369.30p 1.34%
Grainger (GRI) 223.40p 1.32%
Greencore Group (GNC) 296.30p 0.99%

FTSE 250 - Fallers

Man Group (EMG) 118.00p -4.68%
Evraz (EVR) 245.20p -3.84%
Pets at Home Group (PETS) 214.50p -3.68%
Inmarsat (ISAT) 707.50p -3.61%
International Personal Finance (IPF) 279.30p -3.56%
Halma (HLMA) 936.50p -3.45%
Ladbrokes Coral Group (LCL) 121.30p -3.42%
Allied Minds (ALM) 363.00p -2.84%
Cairn Energy (CNE) 184.00p -2.80%
Acacia Mining (ACA) 386.70p -2.74%