Sector Movers: Financial stocks rally to drag London market higher

At the close of proceedings, the FTSE 100 ended 2.48% or 145.63 points higher at 6012.81, while the FTSE 250 ended 1.75% or 281.57 points higher at 16,399.07. Oil futures endured another torrid session, with both Brent and WTI front-month futures heading lower.

Price weakness ensued right from the start of the Asian session, as oversupply concerns returned to dominate market sentiment. At 1715 GMT, Brent was down 1.10% or 38 cents to $34.03 per barrel, while WTI was 1.71% or 55 cents lower at $31.60 per barrel.

Speaking earlier in the week, Saudi Arabia’s Oil Minister Al-Naimi restated his country’s case for “maintaining output” premised on demand picking up excess crude over the medium-term. But Al-Naimi also said there was “less trust” between the big oil powers, making production cuts an unrealistic option, according to a CNBC report.

Away from the oil markets, precious metals saw a largely lacklustre session. The COMEX front-month gold futures contract was flat at $1,239.10 an ounce, while spot gold was up 1.01% or $9.80 to $1,240.36 an ounce. COMEX silver fell 0.89% or 14 cents to $15.20 an ounce, and spot platinum headed 1.78% or $16.74 lower as well to $921.10 an ounce.

Headline base metal futures were lower across the London Metal Exchange board. At 1635 GMT, three-month futures contracts of nickel (down 1.8%), lead (down 0.1%), tin (down 0.1%), copper (down 0.4%) and primary aluminium (down 0.4%) headed lower.

Predictably, Randgold Resources (down 2.93%) and Fresnillo (down 0.25%) registered declines. However, Rio Tinto (down 3.60%) was the biggest resource sector faller on the FTSE 100 after Moody’s downgraded the mining giant and its subsidiaries to Baa1 from A3, with a ‘negative’ outlook.

In a note to clients, the ratings agency said the action reflected its view that there has been a “fundamental downward shift in the mining sector with the downturn being deeper and prospects for a recovery extended, resulting in increased credit risk and weaker metrics for Rio Tinto as well as the global mining sector.”

Evraz (down 4.04%), Riverstone Energy (down 2.97%) and Weir Group (down 2.38%) were among the biggest FTSE 250 fallers.

Away from resource stocks, some much needed positivity came from financial and banking stocks. Lloyds Banking Group (up 13.57%), RSA Insurance Group (up 9.81%), Barclays (up 5.17%) and Royal Bank of Scotland (up 5.13%) were among the biggest gainers on the FTSE 100.

Earlier in the session, Lloyds paid a £2bn dividend despite posting a fall in 2015 profit and having to cough up more cash to cover payment protection insurance mis-selling claims, while RSA Insurance reported a better-than-expected 43.3% jump in full year operating profit to £523m as its restructuring paid off in 2015.

Elsewhere, Serco (up 15.48%) shares surged after it said its full year loss narrowed to £69.4m from £990.5m the previous year. Finally, Capita (down 5.13%) was the biggest faller of the session, after it reported a drop in 2015 full year pre-tax profits to £112.1m from £292.4m the previous year, with the company beset by business exits and impairment charges.