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(Alliance News) - The FTSE 100 had given up morning gains by midday on Monday, with investors growing cautious heading into the final month of the year.
Dragging down London's blue-chip index were oil majors, with eyes on an OPEC meeting on Monday and hopes that current production cuts will be extended.
The FTSE 100 index was down 17.03 points, or 0.3%, at 6,350.55 midday Monday. The mid-cap FTSE 250 index was just 4.38 points higher at 19,467.09 and the AIM All-Share index up 1.1% at 1,050.03.
The Cboe UK 100 index was down 0.3% at 632.56. The Cboe 250 was up 1.2% at 16,784.87, and the Cboe Small Companies up 0.6% at 11,342.41.
In mainland Europe early Monday afternoon, the CAC 40 in Paris was down 0.3%, but the DAX 30 in Frankfurt was up 0.3%.
"Investors are choosing to temper their exposure to risky assets following a 13% rally on equities in November and ahead of another busy week of macro news," said Pierre Veyret, technical analyst at ActivTrades.
He added: "Today's pull-back is more likely to be 'technical' than really threatening to markets as the global economic recovery remains on track and confirmed vaccines keep on lifting long-term uncertainty...More market volatility is expected on oil markets today with a possible agreement from the OPEC meeting on oil output, which should also have a significant impact on oil-related shares including the travel & leisure sector."
Amongst the worst performers in London at the start of the week were oil majors, with BP shares down 2.6% and Royal Dutch Shell 'A' and 'B' shares down 1.6% and 1.7% respectively.
Oil prices slipped ahead of Monday's OPEC meeting. Brent oil was trading at USD47.60 a barrel on Monday, down from USD48.05 late Friday.
The 13 members of the Organisation of the Petroleum Exporting Countries want to avoid a repeat of the collapse in prices seen in April at the beginning of the pandemic. On Tuesday they will be joined by their allies, including Russia, who together form the OPEC+ grouping.
According to the current deal, a cut of 7.7 million barrels per day is meant to be eased to 5.8 million barrels in January 2021, but most observers expect this to be extended by between three and six months. The current deal was reached in April but since then producers have had the second wave of the pandemic to take into account, causing a new hit to demand.
Key players within the grouping have hinted in recent weeks that an extension is on the table despite encouraging news from trials for Covid-19 vaccines by pharmaceutical companies AstraZeneca, Pfizer/BioNTech and Moderna.
Elsewhere on the London Stock Exchange, JD Sports Fashion was the top blue-chip performer, rising 5.7%. The retailer is considering backing away from a possible offer to rescue financially on-the-brink retailer Debenhams, amid the looming collapse of Philip Green's Arcadia Group, the Times reported on Saturday.
Arcadia, which runs the Topshop, Dorothy Perkins and Burton fashion store brands, is the biggest holder of concessions within Debenhams department stores, the newspaper noted.
Mike Ashley's Frasers Group said Monday it has provided draft terms to Arcadia for a loan of up to GBP50 million.
Arcadia has been in emergency talks with lenders in a bid to secure a GBP30 million loan to help shore up its finances. If the insolvency is confirmed, it is expected to trigger a scramble among creditors for control of its assets.
"Should the company and the Arcadia Group's efforts to agree an emergency funding package fail and the Arcadia Group enter into administration, the company would be interested in participating in any sale process," Frasers said Monday.
Frasers, which owns Sports Direct and House of Fraser, was down 2.2% at midday.
HSBC shares fell 2.7% after its Wealth & Personal Banking head was chosen by fellow lender Lloyds as its next chief executive.
Lloyds Banking said it has picked Charlie Nunn as CEO. Nunn is currently global chief executive for Wealth & Personal Banking at HSBC. He joined HSBC in 2011, having also held roles including global chief operating officer of Retail Banking & Wealth Management and head of Wealth Management & Digital.
Antonio Horta-Orsorio's departure after 10 years at the helm of Lloyds was announced back in June. He is aiming to leave by the end of June 2021.
Lloyds shares were up 0.5% at midday.
In the FTSE 250, Dunelm shares rose 4.9% after Royal Bank of Canada raised the homewares retailer to Outperform from Sector Perform.
Wall Street is on track for a largely lower start as US markets re-open for their first full session after last week's Thanksgiving Day holiday. The Dow Jones is called down 0.5% and the S&P 500 down 0.4%, while the tech-heavy Nasdaq is set for a slightly higher start.
America should prepare for a "surge upon a surge" in coronavirus cases as millions of travellers return home after the Thanksgiving holiday, top US scientist Anthony Fauci warned Sunday.
"We may see a surge upon a surge" in two or three weeks, Fauci added. "We don't want to frighten people, but that's the reality."
Pfizer was using charter flights to pre-position the vaccine for quick distribution once it receives US emergency authorization – expected as early as December 10 – the Wall Street Journal and other media reported.
Sterling was quoted at USD1.3359 midday Monday, up against USD1.3331 at the London equities close on Friday. The euro traded at USD1.1990 on Monday, higher than USD1.1957 late Friday.
Crunch talks aimed at securing a post-Brexit trade deal between the EU and UK will resume on Monday in what could be the final week of discussions.
The EU's chief negotiator Michel Barnier and his counterpart David Frost will meet again in London as they seek to hammer out an agreement.
With just a month to go until the end of the transition period, talks remain stuck on fishing rights – described by Dominic Raab as an "outstanding major bone of contention". But the UK foreign secretary said there was "a deal to be done" after the EU showed progress on the so-called level playing field aimed at preventing unfair competition.
AJ Bell investment director Russ Mould said: "It feels like Groundhog Day when it comes to Brexit as we enter yet another 'crunch week'. However, with just a month until the end of the transition period something definitely has to give – we should soon know if it is deal or no deal."
Against the yen, the dollar edged down to JPY103.95 versus JPY103.99. Fellow safe haven asset, gold, was struggling on Monday, however. Gold was quoted at USD1,772.20 an ounce on Monday, lower than USD1,786.40 on Friday.
In Monday's economic calendar, there is German inflation at 1300 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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