London midday: Stocks rise as oil prices surge on OPEC optimism

London stocks gained on Wednesday as oil prices surged after Iran and Saudi Arabia sounded an upbeat note on a potential OPEC deal to curb production.

The FTSE 100 rose 0.87% to 6,831.20 points.

Saudi energy minister Khalid al-Falih said on Wednesday OPEC was close to reaching a deal to limit oil output while his Iran counterpart Bijan Zanganeh said he was “optimistic” of an agreement.

Riyadh said Saudi was prepared to accept "a big hit" to its own production but Zanganeh said there had been no request for Iran to cut output.

Brent crude jumped 6.7% to $49.76 per barrel and West Texas Intermediate advanced 6.3% to $48.31 per barrel at 1138 GMT.

“Should we see an agreement today, it would represent one of the most important days for oil markets in years, with the Saudis essentially abandoning their attempts to push out US producers from the market,” said IG analyst Joshua Mahony.

“The decision to leave it to the markets has clearly been a disaster for OPEC members who have been long reliant upon oil revenues to prop up their economies. After years of austerity and budget deficits, could today mark the day when OPEC says enough is enough?”

Earlier in the session, 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 strengthen its balance sheet, while rivals Barclays and Standard Chartered failed requirements but will not require fresh capital.

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 2.9%, while Barclays slid 0.16% and StanChart slipped 0.14%.

Speaking on the risks to UK banking following the BoE stress test results, Bank of England Governor Mark Carney warned the EU will face major hits to its economy if it does not agree to a transitional period to allow banks and finance firms time to adapt to Brexit. He added the EU needs financing from Britain.

“Banks located in the UK supply over half of debt and equity issuance by continental firms, and account for over three-quarters of foreign exchange and derivatives activity in the EU,” Carney said.

“If these UK-based firms have to adjust their activities in a short time frame, there could be a greater risk of disruption to services provided to the European real economy, some of which could spill back to the UK economy through trade and financial linkages.”

Elsewhere, Zoopla gained ground after reporting a rise in full-year profit and revenue and announcing the acquisition of estate agency website design and hosting business Technicweb.

Unilever, which is holding its annual investor event on Wednesday, rallied as traders showed fresh interest in a range of defensive stocks.

IG Group ticked higher after it said trading in the second quarter has continued to be in line with its expectations.

Pub group Greene King edged lower despite posting a jump in interim profit, while gambling software company Playtech slumped after its founder sold a discounted 12% stake for £329m.

Investors were also mulling over the latest survey from market research firm GfK, which showed UK consumer and business confidence fell further in November amid worries about the impact of the Brexit vote.

GfK’s long-running consumer confidence index fell five points to -8, missing expectations of a decline to -4.

Joe Staton, head of market dynamics at GfK, said: “The slump across the board this month points to continuing uncertainty about the state of the economy among consumers. Although scores for our personal financial situation just about remain positive, the big theme is the reduced confidence in the UK economy looking back and ahead. We are viewing our economy over the past 12 months with increasing despondency. The decreasing score on the economy for the next 12 months also shows we are resolutely gloomy about the outlook despite strong GDP numbers.”

Still to come, European Central Bank President Mario Draghi speaks at 1300 GMT, while the US ADP employment report is due at 1315 GMT, while the Chicago PMI is at 1445 GMT and US pending home sales are at 1500 GMT.

Market Movers

FTSE 100 (UKX) 6,831.20 0.87%
FTSE 250 (MCX) 17,592.55 0.35%
techMARK (TASX) 3,286.18 0.34%

FTSE 100 - Risers

Ashtead Group (AHT) 1,573.00p 4.10%
Royal Dutch Shell 'B' (RDSB) 2,114.50p 4.09%
Unilever (ULVR) 3,251.50p 3.88%
Royal Dutch Shell 'A' (RDSA) 2,020.50p 3.67%
Hikma Pharmaceuticals (HIK) 1,721.00p 3.12%
BP (BP.) 455.10p 2.84%
Intertek Group (ITRK) 3,341.00p 2.80%
CRH (CRH) 2,706.00p 2.42%
BT Group (BT.A) 361.65p 2.06%
Pearson (PSON) 792.50p 1.80%

FTSE 100 - Fallers

Capita (CPI) 526.00p -5.65%
Royal Bank of Scotland Group (RBS) 190.90p -3.10%
Rio Tinto (RIO) 2,988.00p -2.58%
easyJet (EZJ) 986.00p -2.47%
Glencore (GLEN) 275.25p -2.17%
ITV (ITV) 167.50p -2.16%
Anglo American (AAL) 1,180.50p -1.99%
Antofagasta (ANTO) 688.00p -1.71%
Travis Perkins (TPK) 1,350.00p -1.46%
Provident Financial (PFG) 2,922.00p -1.45%

FTSE 250 - Risers

Tullow Oil (TLW) 289.50p 10.16%
RPC Group (RPC) 1,078.00p 7.58%
Britvic (BVIC) 588.50p 7.39%
Zoopla Property Group (ZPLA) 341.60p 7.08%
Hunting (HTG) 524.50p 6.22%
Amec Foster Wheeler (AMFW) 429.80p 5.42%
Sports Direct International (SPD) 310.50p 4.72%
Cairn Energy (CNE) 191.20p 4.65%
Brewin Dolphin Holdings (BRW) 274.20p 4.30%
Wood Group (John) (WG.) 818.00p 3.35%

FTSE 250 - Fallers

Playtech (PTEC) 848.00p -8.03%
NCC Group (NCC) 185.50p -3.79%
Restaurant Group (RTN) 325.10p -3.42%
Greene King (GNK) 690.00p -3.02%
TalkTalk Telecom Group (TALK) 157.30p -2.90%
Allied Minds (ALM) 363.20p -2.78%
Atkins (WS) (ATK) 1,408.00p -2.49%
Man Group (EMG) 114.10p -2.48%
Kaz Minerals (KAZ) 355.60p -2.39%
Mitchells & Butlers (MAB) 228.60p -2.27%