BP Share News (BP.)

LONDON (Alliance News) - Shares in London ended mixed Monday, with oil-related stocks as the main drag, but also hit by a negative open in New York, where stocks were giving back gains made on Friday after a strong jobs report supported the case for a rate hike in the US next week.

London's main stock indices failed to consolidate earlier gains, with the FTSE 100 index ending down 0.2% at 6,223.52 points and the FTSE 250 down 0.1% at 17,356.10. Meanwhile, the AIM All-Share managed to end up 0.2% at 741.68.

Crude prices were again under pressure on Monday after plunging on Friday following the decision of the Organisation of Petroleum Exporting Countries to maintain production levels despite an oversupplied market and low prices.

At its press conference following a meeting, Nigerian Petroleum Minister Emmanuel Kachikwu explained that the OPEC, which accounts for about a third of world oil output, would effectively maintain its actual current production level, which analysts said is 2 million barrels per day above the previously agreed target of 30 million barrels per day.

However, Abdallah Salem el-Badri, secretary general of OPEC refrained from putting an exact number on the cartel's production ceiling.

Brent oil was priced at USD41.12 a barrel at the London close, trading near seven-year lows and down from USD43.04 at the London equities close on Friday. Meanwhile, West Texas Intermediate was at USD37.94 a barrel.

As a result, Royal Dutch Shell 'A' shares ended at the bottom of the FTSE 100, down 4.0%, while Shell 'B' shares finished down 3.2%. BP lost 3.5% and BG Group 1.2%.

Stocks in New York suffered from the lower oil prices as well, but Spreadex analyst Connor Campbell said that investor confidence also was being hit by the prospect of a rate hike from the US Federal Reserve in its next meeting on December 15-16.

"It is hard to tell what is having a bigger impact on the Dow Jones, the chunky losses for Chevron and ExxonMobil or lingering resentment towards the now-almost-certain December rate hike set to appear next week," said Campbell.

The Dow 30, the S&P 500 and the Nasdaq Composite ended all up 2.1% on Friday helped by a US robust jobs report that renewed confidence in the US economy and paved the way for an increase in US interest rates.

The US Labor Department said non-farm payroll employment jumped by 211,000 jobs in November compared to economist estimates for an increase of about 200,000 jobs.

US stocks were lower Monday at the London close, with the Dow Industrials down 0.9%, the S&P 500 index down 1.0% and the Nasdaq Composite down 0.8%. Shares in oil majors Chevron and ExxonMobil were down 3.5% and 3.1%, respectively.

Alongside oil stocks, London-listed mining stocks also occupied the bottom of the FTSE 100, with BHP Billiton down 2.1%, Antofagasta down 2.8% and Glencore down 2.5%. The gold price was under pressure Monday, quoted at USD1,076.02 at the London close, having hit a six-year low last week.

European markets fared better Monday. The CAC 40 index in Paris and the DAX 30 in Frankfurt ended up 0.9% and 1.3%, respectively, though also off their session highs.

Eurozone investor confidence rose for a second straight month in December to its highest level in four months, results of a survey by Sentix revealed Monday, as the European Central Bank moved to add more stimulus to boost the region's economy. The Sentix investor confidence index climbed to 15.7 from 15.1 in November. However, economists had forecast a much higher score of 17.0.

The pound was at USD1.5065 at the London close, while the euro was at USD1.0843.

In London, the Bank of England approved on Saturday Aviva's and Prudential's capital models, among other 19 insurers, allowing them to have more control over the level of capital they hold.

The new Solvency II insurance rules, which are set to come into force on January 1, 2016, are designed to strengthen protection of insurance policyholders across the EU, and the Prudential Regulation Authority's stamp of approval enables insurers on the list of 19 to use their own internal models to calculate their capital levels from day one of the new regime.

Legal & General Group, RSA Insurance Group and Standard Life were three other listed insurers to have their full or partial internal capital models approved by the central bank's PRA. Scottish Widows, owned by Lloyds Banking Group, was another insurer to receive approval for its own model.

However, analysts at UBS said that clearing that hurdle shouldn't distract these insurers from the obstacles ahead.

"Despite Solvency II implementation imminent, there remain a number of key issues that have yet to be decided by regulators. Issues include contract boundaries, treatment of matching adjustment portfolios, fungibility of capital, treatment of deferred tax asset and transitional benefits to name but a few," Colm Kelly and James Shuck of UBS said in a note.

Shares in Aviva ended up 0.6% and Prudential up 1.2%, while Legal & General added 0.4%. RSA Insurance finished up 0.6% and Standard Life up 0.5%.

Meanwhile, Hammerson added 1.4% to 610.50 pence after Deutsche Bank hiked its price target on the real estate developer to 775p from 750p and reiterated its Buy rating on the stock.

Deutsche said it favours Hammerson's prime retail exposure and attractive earnings growth prospects and said the company's quality assets offer "optionality" on rental growth. The company remains one of Deutsche's top picks in the real estate sector in the UK.

Land Securities Group, a rival of Hammerson, were also bought, ending up 1.1%, as Deutsche upgraded the stock to Buy from Hold.

DIY retailer Kingfisher closed down 2.4%. The stock was downgraded to Reduce from Neutral by Nomura, which said the change in recommendation was driven by its caution on Kingfisher's fourth quarter trading to end January 2016 and reduced pretax profit estimates for financial 2017, as well as the potential costs of implementing its 'One Kingfisher' program.

Though in favour of Kingfisher's strategic plan, Nomura said it may be tough to execute and will be reliant on a cyclical recovery in the European market.

In the FTSE 250, AO World finished up 4.2%. The online electrical appliances retailer that revealed prominent fund manager Ruane, Cunniff & Goldfarb has taken a 5.0% stake in the company. The investment firm, which runs the Sequoia Fund, took a 5.4% stake in the company last week, according to a stock exchange filing.

The investment came just over a week after AO World reported a swing to a first-half loss due to investments made in its German operation and start-up costs in other parts of Europe. In February, it issued a profit warning following a slowdown in sales in the fourth quarter of its financial year to the end of March, then missed those downgraded expectations in June, sending its share spiralling lower.

The Sunday Times reported a number of other potential suitors have lined up both for the Homebase business and for a break-up bid for owner Home Retail Group, in addition to a possible bid for Homebase from former Garden Centre Group boss Nicholas Marshall.

Though some analysts are sceptical that a bid will emerge from Marshall, several retail industry figures have been tapped by private equity firms in recent months to advise on possible bids for the company, the newspaper said.

Home Retail shares ended up 3.8% Monday.

In the corporate calendar Tuesday, Victrex releases full-year results, EnQuest issues an operational update, while Daily Internet and Hornby publish half-year results. RWS Holdings and Treatt provide full-year results, and Polar Capital Technology Trust and Hansa Trust release half-year results. Headlam Group is set to provide a trading statement.

In the economic calendar, China's imports and exports data are due at 0200 GMT, while the same from France are expected at 0745 GMT. UK manufacturing and industrial production data are due at 0930 GMT, while the NIESR GDP Estimate for the third-quarter is due at 1500 GMT. Before that, the eurozone third-quarter gross domestic product data are due at 1000 GMT.

In the US, the Redbook index is due at 1355 GMT, while JOLTS job openings data are expected at 1500 GMT.

By Daniel Ruiz; danielruiz@alliancenews.com

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