LONDON MARKETS: FTSE 100 Climbs As OPEC-deal Prospects Brighten, But RBS Drops

By Carla Mozee, MarketWatch

U.K. stock benchmark set to break string of monthly gains

U.K. stocks swung higher Thursday, with oil shares surging in anticipation of an oil-output agreement by the Organization of the Petroleum Exporting Countries, but the Royal Bank of Scotland PLC's stock dropped after the lender failed the Bank of England's stress test.

The FTSE 100 advanced 0.6% at 6,811.95. The index on Tuesday dropped 0.4% (http://www.marketwatch.com/story/opec-concerns-bt-shares-drag-ftse-100-lower-for-second-day-2016-11-29), marking a second consecutive decline.

The oil and banking industries are in the spotlight Wednesday as trading wraps up for November, which should see the FTSE 100 mark a monthly decline of roughly 2%. That would be the index's first monthly loss after five months of gains.

Follow MarketWatch's OPEC live blog (http://blogs.marketwatch.com/thetell/2016/11/30/opec-meets-in-vienna-to-hash-out-oil-deal-live-blog/?mod=MW_story_latest_news)

OPEC: Prices for West Texas Intermediate oil jumped 3.5%, while Brent crude shot up 4%, following reports that OPEC Secretary General Mohammad Barkindo said the group will reach a deal Wednesday on cutting production. The cartel is meeting in Vienna.

Gains accelerated for shares of oil producers BP PLC (BP.LN) (BP.LN) and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) . The stocks drove higher by 2.2% and 3%, respectively.

An OPEC deal would be aimed at tackling the industry's persistent oversupply problem. A proposal would have the group cut production by more than a million barrels a day, or about 1% of the global oil supply.

Read:OPEC oil meeting: 7 things you need to know (http://www.marketwatch.com/story/opec-oil-meeting-7-things-you-need-to-know-2016-11-28)

(http://www.marketwatch.com/story/opec-oil-meeting-7-things-you-need-to-know-2016-11-28)And also: (http://www.marketwatch.com/story/opec-oil-meeting-7-things-you-need-to-know-2016-11-28)Here's how ugly it could get for stocks if OPEC can't reach a deal (http://www.marketwatch.com/story/heres-how-ugly-it-could-get-for-stocks-if-opec-cant-reach-a-deal-2016-11-29)

Stress tests: Royal Bank Of Scotland Group (RBS.LN) (RBS.LN) dropped 1.9%, but was off session lows, as the lender failed a tougher stress test of systemic U.K. banks (http://www.marketwatch.com/story/rbs-fails-bank-of-england-stress-test-to-boost-capital-plan-2016-11-30) and must come up with a revised plan to raise capital, the Bank of England said Wednesday. RBS must raise around GBP2 billion ($2.5 billion) in capital. (http://www.marketwatch.com/story/rbs-fails-boe-stress-test-needs-25-bln-capital-2016-11-30)

The process also revealed capital inadequacies at Standard Chartered PLC (STAN.LN) and Barclays PLC (BCS) (BCS) , but the lenders won't have to submit new capital plans because they've already undertaken capital strengthening measures, the BOE said in a statement. Standard Chartered shares fell 0.4% and Barclays shares were flat at GBP2.14 each.

"The key takeaway from the report is that the outlook for financial stability is challenging, Brexit and high levels of household debt have been cited as the key reasons for this," said Kathleen Brooks, research director of City Index, in a note.

"On the positive side, the BOE said that the U.K. is well able to finance its huge current account deficit, and the banking system, although not perfect, is in a position to support the U.K. economy, even in a severely stressed scenario," she said.

The pound bought $1.2479, down from $1.2503 late Tuesday in New York.

(END) Dow Jones Newswires

November 30, 2016 04:06 ET (09:06 GMT)

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