FTSE 100 movers: Shell and BP lead gains after Opec cuts deal

Pumped up by a reported deal to cut global oil production, oil giants Shell and BP led the FTSE 100 index 0.6% higher by late afternoon on Wednesday.

After months of squabbling, Opec reportedly agreed its first deal to cut crude oil production in eight years.

Reports suggested there would be a cut of 1.2m barrels per day to 32.5mmbpd, according to a source in the Saudi Arabia-led cartel of oil producers.

Oil prices gushed around 8% initially before retreating slightly, with Brent crude up more than 7% to $49.8 per barrel and West Texas Intermediate up by a similar amount to $48.4.

Some sector watchers said the cut did not look that impressive and would require the co-operation of non-Opec members, as well as uncertainty about the status of Indonesia, which produces about 700,000 bpd as was reported to have been booted out of the cartel.

"We are still sceptical that such a dramatic rise in prices is yet justified for a number of reasons," said commodities specialist Thomas Pugh at Capital Economics, citing Russia's hope for a smaller

He added: "The upshot is that, unless the meeting ends with a detailed agreement containing credible individual country quotas, we suspect that the current strength in prices will not last long. We are therefore maintain our end-year forecast of $45 per barrel."

Nevertheless, Royal Dutch Shell was up more than 5% and BP climbing more than 4%, but both still below last month's 18-month highs.

Airlines easyJet and British Airways owner IAG were both lower as higher oil prices will represent an increased cost.

Among the other higher risers, consumer goods group Unilever was benefiting from a renewed interest in defensive stocks, analyst Mike van Dulken at Accendo Markets said, plus was holding an investor event in London on Wednesday.

Positive broker comment helped hoist Ashtead Group onto the leaderboad, with RBC Capital Markets increasing its price target ahead of the plant hire outfit's second quarter results next week. As the quarter has historically been Ashtead's strongest, with six years of consecutive upgrades following the release of this statement, RBC reckoned a "lucky" seventh is inevitable given currently supportive end markets and favourable exchange rates, upping the price target to 1,700p from 1,580p and keeping an 'outperform' rating.

Speeding in the opposite direction way was Capita, as the outsourcing group hit a 10-year low after analysts at HSBC warned the shares had the potential to crumble yet further than their already precipitous plunge since September's profit warning. Analysts cut the stock to 'reduce' from 'hold' and slashed the price target to 450p from 1,020p, noting that market backdrop is gloomy with a weak UK public sector pipeline and private sector decision making screeching to a halt post the Brexit vote.

Royal Bank of Scotland was a notable faller but nowhere near its own lows despite failing all of the Bank of England's annual stress tests and being forced to submit plans to improve its capital position. BoE Governor Mark Carney said RBS had made a lot of improvements to its core business in recent years but still has "legacy issues", of misconduct costs, impaired assets and more.

He pointed out that RBS's proposal about strengthening its balance sheet was "not talking about raising capital, they're talking about reducing certain types of assets and increasing capital through other activities as oppose to going out and raising capital".

FTSE 100 banking rivals Barclays and Standard Chartered stumbled over some hurdles but not badly enough to require raising new funds, with their shares dipping in early trade but closing in positive territory.

FTSE 100 - Risers

Royal Dutch Shell 'B' (RDSB) 2,130.00p 4.85%
Royal Dutch Shell 'A' (RDSA) 2,035.00p 4.41%
BP (BP.) 460.40p 4.03%
Ashtead Group (AHT) 1,566.00p 3.64%
Unilever (ULVR) 3,221.50p 2.92%
Pearson (PSON) 797.00p 2.38%
Intertek Group (ITRK) 3,312.00p 1.91%
Hikma Pharmaceuticals (HIK) 1,699.00p 1.80%
Mediclinic International (MDC) 715.00p 1.78%
3i Group (III) 683.50p 1.64%

FTSE 100 - Fallers

Capita (CPI) 520.50p -6.64%
Rio Tinto (RIO) 2,998.50p -2.23%
Carnival (CCL) 4,040.00p -2.16%
easyJet (EZJ) 991.00p -1.98%
Sage Group (SGE) 662.50p -1.92%
Travis Perkins (TPK) 1,344.00p -1.90%
Royal Bank of Scotland Group (RBS) 193.30p -1.88%
International Consolidated Airlines Group SA (CDI) (IAG) 436.20p -1.87%
Provident Financial (PFG) 2,913.00p -1.75%
Fresnillo (FRES) 1,213.00p -1.70%