B&E | Surging Oil Prices pushes UK's FTSE Higher
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B&E | Surging Oil Prices pushes UK's FTSE Higher

By Peter Hobson and Alistair Smout

FTSE 100 Index / Nov 30, 2016

LONDON, Nov 30 (Reuters) - Britain's top share index rose on Wednesday, led by rebounding energy stocks after oil prices surged to their biggest one-day gain in nine months when major producers agreed to output cuts to curb oversupply.    

The blue-chip FTSE 100 index closed up 0.2 percent. But the index still fell 2.5 percent in November, snapping a five-month winning run.    

The index has under-performed European peers this month, as it contains many defensive stocks that have lagged as investors have bet on a return of inflation and growth following the election of Donald Trump as U.S. president.   

The oil and gas sector is also down 1.8 percent for November, as it has been whipsawed by speculation over Wednesday's meeting of top oil producers in Vienna.   

On Wednesday, however, the FTSE's oil and gas index  rose 4.1 percent after the price of oil shot up as members of OPEC, the oil producers' cartel, agreed to trim output for the first time since 2008 in a last-ditch bid to support prices.    

Brent crude was last up 8 percent, its biggest gain since February, at around $50 per barrel. Analysts have said a successful deal by OPEC could send oil towards $60 per barrel, which would have a big affect on UK energy stocks.    

Royal Dutch Shell and BP were the FTSE 100's biggest gainers, rising 4 percent and 3.8 percent respectively.  

Energy stocks on the mid-cap FTSE 250 rose even faster, with Tullow Oil and Cairn Energy up around 14 percent.    

Conversely, the prospect of higher fuel bills pushed easyJet and International Consolidated Airlines Group down 2.1 percent and 2.5 percent.    

Royal Bank of Scotland lost 1.4 percent after it failed a stress test by the Bank of England, meaning it will have to bolster its capital buffer to address a shortfall of some 2 billion pounds ($2.49 billion).

Barclays, Standard Chartered, Lloyds Banking Group and HSBC all gained between 0.3 and 1.6 percent, despite Barclays and Standard Chartered failing some parts of the test.    

The test's outcome was generally reassuring, said Ipek Ozkardeskaya, an analyst at London Capital Group.   

"The results showed greater balance sheet resilience across the UK's banking sector ... This is comforting news for all sectors, which may face uncertain times as the UK prepares to leave the European Union," she said.     

Elsewhere, slipping gold and metals prices drove down mining stocks, with Fresnillo, Rio Tinto and Rangold Resources losing between 2.5 percent and 2.8 percent.   

Shares in Capita fell to their lowest since 2006 after the outsourcing firm received two broker downgrades. Its stock was down 5.9 percent, the FTSE 100's biggest faller.   

Several stocks touched record high levels. Equipment rental firm Ashtead rose 3.7 percent and touched an all-time high after RBC raised its target price.    

While overall the FTSE 250 was flat, mid-cap stock Zoopla  briefly hit its best level after the property listing and price comparison website announced strong results and an optimistic forecast, despite fears of a Brexit-related slowdown on the UK housing market. It finished up 5 percent.   

Packaging company RPC also struck record levels on higher revenues and broker upgrades, and was up 7.5 percent.   

(Reporting by Peter Hobson; Editing by Alison Williams)

(c) 2016 Thomson Reuters