LONDON MARKETS: FTSE 100 Ends Higher As OPEC Deal Powers Oil Shares

By Carla Mozee, MarketWatch

U.K. stock benchmark breaks string of monthly gains

U.K. stocks strengthened Wednesday, with a deal by OPEC to cut production prompting gains for energy shares, but Royal Bank of Scotland PLC's stock declined after the lender failed the Bank of England's stress test.

The FTSE 100 closed up 0.2% at 6,783.79, but backed off an intraday increase of 1.1% as basic material, consumer-services and utility shares were pushed down.

The oil and banking industries were in the spotlight as trading wrapped up for November. The FTSE 100 closed with monthly decline of 2.5%, the index's first such loss after five months of gains. That string was the longest since a 12-month win streak ended in May 2013.

OPEC: Major oil producers and members of the Organization of the Petroleum Exporting Countries in Vienna hammered out an agreement to curb daily oil production by 1.2 million barrels as it tackles an oversupplied market. That sent prices for Brent crude oil shooting past $50 a barrel and rallying more than 8%, and West Texas Intermediate oil futures surging about 9% to top $49 a barrel.

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)

Those moves helped push up London-listed shares of oil producers BP PLC (BP.LN) (BP.LN) and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) by 3.8% and 4.3%, respectively. Shares in the companies make up a roughly 15% weighting on the FTSE 100.

"The deal is the first time that OPEC has cut production in eight years, and for many it has come 12 months too late as lower oil prices has crippled some economies in that period," said James Hughes, chief market analyst at GKFX, in a note.

"A failure to finalize a deal would have been terrible for OPEC, and would show the oil cartel as impotent in the face of record high output and stubbornly low prices," Hughes added. "So this is just as much a PR job for OPEC as it is a move to push prices higher."

(http://www.marketwatch.com/story/opec-oil-meeting-7-things-you-need-to-know-2016-11-28)Stress tests: Royal Bank of Scotland Group (RBS.LN) (RBS.LN) managed to close off session lows but still finished the session by ending down 1.4%. The shares suffered after the bank 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), the Bank of England said. 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 and Barclays PLC, but those lenders won't have to submit new capital plans because they've already undertaken capital strengthening measures, the BOE said in a statement. Shares of Standard Chartered (STAN.LN) turned higher and closed up 1.6% and Barclays (BCS) (BCS) finished up 0.8%.

See: Italy's vote lies in wait for European banks (http://www.marketwatch.com/story/italys-vote-lies-in-wait-for-european-banks-2016-11-30)

"The key takeaway from the report is that the outlook for financial stability is challenging [and] 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.

In other moves Wednesday, Capita PLC shares (CPI.LN) slid 5.9% to close at GBP5.25, their lowest settlement since August 2006, according to FactSet data, after HSBC downgraded the business-support services provider to a neutral rating.

The pound bought $1.2487, down from $1.2503 late Tuesday in New York.

Investors on Thursday will receive a November reading on British manufacturing activity at 9:30 a.m. London time, or 4:30 a.m. Eastern Time.

(END) Dow Jones Newswires

November 30, 2016 12:52 ET (17:52 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.