Europe midday: Stocks in the black as energy issues rally on OPEC

At midday, the benchmark Stoxx Europe 600 index was up 0.6%, Germany’s DAX was 0.7% higher and France’s CAC 40 was up 1%.

At the OPEC meeting in Algiers, ministers agreed to cut production to between 32.5m and 33m barrels a day, down from August output levels of about 33.5m barrels, with further details of the agreement due to be discussed at the next meeting on 30 November.

Oil prices initially surged on the news, but by Thursday morning they were retreating, with investors booking profits as scepticism crept in about the deal.

West Texas Intermediate was down 0.4% at $46.85 a barrel and Brent crude was off 0.7% at $48.33.

Still, energy stocks powered ahead, with the Stoxx 600 oil and gas index up 4.2%.

IG’s Chris Beauchamp said: “OPEC’s surprise decision to cut output has given oil markets a remarkable fillip, with the hope that more will come at the November meeting undoubtedly playing a part.

“Expectations of a bigger cut to output later on in the year, ideally with Saudi Arabia and Russia, the two biggest players, doing their bit, could see oil reverse its traditionally weak performance in the fourth quarter and push higher. It turns out that OPEC members can agree, and no doubt oil companies and their investors will be hoping that this outbreak of amity continues into the end of 2016.”

However, Spreadex’s Connor Campbell highlighted the fact that while European indices continued to benefit from reports of an OPEC deal, Brent crude itself seemed a bit more sceptical.

“The black stuff has spent the morning teasing a half a percent decline, suggesting that the joy the commodity felt last night doesn’t quite hold up in the cold light of day. 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.”

In corporate news, Bankia gained ground on news the Spanish government is considering merging the bank with Banco Mare Nostrum.

Credit Suisse was also in the black amid reports the bank could settle a US investigation into its mortgage-bond dealings within weeks.

On the downside, Commerzbank was under pressure after saying it will reduce its workforce by 20% in the next few years by axing 9,600 jobs as it looks to cut costs and boost profitability.

Outsourcer Capita tumbled after 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.

On the data front, figures from Destatis showed German unemployment unexpectedly rose in September, but the unemployment rate remained at a record low.

The unemployment rate came in at 6.1%, unchanged from the previous month and in line with economists’ expectations.

Meanwhile, the number of unemployed people increased by a seasonally-adjusted 1,000 to 2.68m, versus expectations of a 5,000 drop.

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.