Sector movers: Oil, Mining stocks drag London market lower

Oil and mining stocks pushed the London market lower on Monday, as nickel prices dropped and comments from OPEC sent Brent and WTI oil futures sliding.

The FTSE 100 ended 0.70% or 44.98 points lower at 6,371.98, while the FTSE 250 was 0.58% or 98.97 points lower at 16,986.95. In a scheduled data release, OPEC noted that it had produced 31.57 million barrels of oil per day in September; the cartel's highest rate of production since 2012.

Responding to the data, Secretary General Abdalla Salem El-Badri said, “At OPEC, we are hopeful that the industry will see a more balanced oil market in 2016. We have recently seen a contraction in production from some non-OPEC producers and an uptick in demand growth.”

In response, the Brent front-month futures contract for November delivery was down 1.65% or 87 cents at $51.78 per barrel after 1453 BST, while the WTI was 1.83% or 91 cents lower at $48.72 per barrel. Base metal futures were largely in positive territory on the London Metal Exchange, but the three-month nickel (down 0.9%) futures contract shed some of last week’s gains, past the midway point of trading, as uncertainty continued in the mining sector.

Glencore, down 6.16% or 7.95p at 121.15p, was the biggest blue chip faller, with sector peers Anglo American (down 4.79%) and Antofgasta (down 3.27%) in close attendance.

Oil and gas blue chips BP and Royal Dutch Shell also registered declines as did oilfield service provider Weir Group. Many of the midcap stocks to slip also came from the sector as Tullow Oil, down 5.32% or 13.60p to 242.10p, led the FTSE 250 fallers.

Elsewhere, aviation and engineering stocks were dragged lower, following a 3.90% decline in Rolls-Royce shares as investors reacted to a Financial Times report stating that European airlines are being forced to enter into anti-competitive contracts to keep their 24,000 aircraft flying.

The FT said late on Friday that this comes as equipment makers seek a slice of the $60bn a year maintenance and repair market. The newspaper also claimed the European Commission has written to the airlines and aircraft component manufacturers asking for information about the provisions being written into services contract – terms that could restrict choice when servicing everything from engines to Wi-Fi networks.