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LONDON (Alliance News) - The FTSE 100 made slim gains Monday after oil prices rallied from their intraday lows, as investors looked beyond oil producers' failure to agree an output freeze in Doha on Sunday.
The FTSE 100 ended up 0.2%, or 9.77 points at 6,353.52. The FTSE 250 closed down 0.1%, or 21.07 points, at 16,889.75 and the AIM All-Share ended up 0.2%, or 1.27 points, at 733.56. In Europe, the French CAC 40 closed up 0.3% and the German DAX 30 closed up 0.7%.
Stocks in the UK and Europe had opened lower Monday, with the FTSE 100 sinking to a low of 6,261.71, after top oil producers delayed an agreement to freeze crude output levels to shore up low prices, saying they needed "more time for further consultations".
Following marathon talks in Doha, Qatari Energy and Industry Minister Mohammed bin Saleh said at a press conference that participants in the meeting had agreed on the need for more time for discussion. OPEC members will meet in Vienna on June 2 to consider a possible freeze.
Bin Saleh ducked questions about whether Iran was to blame for failure to reach the deal. "The freeze could be more effective definitely if major producers, be it from OPEC members like Iran and others, as well as non-OPEC members, are included in the freeze," bin Saleh said.
Iran has said it aims to raise its oil output to regain market share following the lifting of international sanctions. Iran had initially planned to send its OPEC minister to the meeting, but his participation was cancelled when the Qataris insisted that all attendees also would be signatories to any deal.
Sources in Doha said Saudi Arabia, the world's top oil exporter, demanded that any cap deal must be binding to all producers, building on the growing tensions between Saudi Arabia and its regional rival Iran.
Crude prices initially tumbled after the meeting concluded with no agreement, but over the course of the London equity session, prices rose.
At the London close, West Texas Intermediate traded at USD39.67 a barrel, up from its earlier low of USD37.59. Similarly, Brent oil sharply rebounded to USD42.75 a barrel from an initial low of USD40.08 a barrel Monday. Just after the close, the North Sea benchmark was trading at USD43.18 a barrel, surpassing the USD42.80 a barrel seen at the London market close on Friday, before the meeting began.
UBS analysts Jon Rigby and William Featherston said the lack of a concrete agreement in Doha is unlikely to have a material impact on the fundamentals of oil supply and demand.
"The fallout is ultimately immaterial to our market view: we see limited capacity for producers to expand output in any case, and we did not expect Iran to be subject to a freeze," the analysts said.
"The break-down in producers' relationships does have some implications however: it suggests that any attempt to balance the market, should demand falter, will be tougher to engineer while also leaving open the possibility that Saudi may choose to expand its production from its as yet untested spare capacity," Rigby and Featherston added.
Fawad Razaqzada, technical analyst at FOREX.com and City Index, was sceptical about whether an agreement to freeze production would have an effect on fundamentals in the oil market.
"As Oman's oil minister said, many oil producers with the exception of a few such as Iran are already at peak production capacity anyway. A deal to freeze oil production at these peak levels would therefore not have helped to immediately reduce the supply glut significantly quicker than would be the case now," Razaqzada said.
Royal Dutch Shell 'B', down 0.7%, and Royal Dutch Shell 'A', down 0.6%, while BP ended fractionally lower.
At the other end of the index, travel stocks benefited from the prospect of continued low fuel costs. TUI Group was boosted also as analysts at Berenberg moved the stock to Buy from Hold, closing up 3.3% and the best performer in the FTSE 100. International Consolidated Airlines Group, the owner of British Airways, closed up 1.3% and budget airline easyJet, ended up 1.6%.
The price of gold at the London close was USD1,234.77 an ounce, higher than USD1,230.90 seen at the close on Friday.
At the London equities close Monday, the pound traded the dollar at USD1.4263, higher than USD1.4186 seen at the close on Friday.
The euro was also higher against the dollar at USD1.1319 Monday compared with USD1.1308 Friday.
On Wall Street at the European equity close, the Dow Jones Industrial Average and S&P 500 were both up 0.4% and the Nasdaq Composite was up 0.2%.
Reckitt Benckiser Group closed up 2.0%. The consumer goods company said it delivered strong like-for-like sales growth in its Health and Hygiene product portfolios in the first quarter. This was offset by a flat performance in its Home business and a decline in sales for its Portfolio Brands.
Reckitt said like-for-like sales for its Health product business grew 11% in the quarter to the end of March. It saw good performances from its Durex range, Gaviscon heartburn relief and Strepsils throat lozenges in the quarter. Hygiene product sales were more muted, up 1.0% in the quarter.
Centrica shares ended down 1.6%. The UK power company said it is on track to meet its targets for 2016 following a solid performance in the first quarter but said it saw a fall in domestic energy customers in the period as customers rolled off fixed-price deals.
Centrica, which has both upstream and downstream oil and gas operations and which runs the British Gas consumer energy business, said it expects to deliver GBP200.0 million in efficiency savings in 2016 as part of its plan to cut GBP750.0 million in costs out of the business.
However, while group cost-cutting efforts remain on track, Centrica said its number of UK home energy supply accounts shrank by 1.5% in the first quarter, primarily due to long-term contract churn. This translates to a loss of around 220,000 customers.
Industrial and commercial gas metering services provider Energy Assets Group agreed to be acquired by Alinda Capital Partners in a GBP198.0 million deal.
Alinda, a US infrastructure fund manager, will pay 685.00 pence per share to acquire Energy Assets, a 40% premium to its closing price on Friday and 41% premium to its volume-weighted average closing price for the month prior to Friday.
On Monday, the stock closed up 40% at 682.00p, making it the best performer in the FTSE All-Share index.
Still ahead in the UK corporate calendar, miner Rio Tinto releases its operations review at 2330 BST, while fellow miner BHP Billiton releases its March operational review on Tuesday at 2330 BST.
At 0700 BST on Tuesday, sugar producer and Primark owner Associated British Foods reports interim results, over-50s products company Saga reports full-year results and emerging markets money manager Ashmore Group issues a trading statement.
Catering and support services business Connect Group reports interim results, as does utility cost management consultancy Utilitywise, retirement housebuilder McCarthy & Stone.
In the economic calendar, eurozone current account balance is revealed at 0900 BST, ZEW economic sentiment surveys for Germany and the eurozone are published at 1000 BST, at the same time as eurozone construction output.
Later in the day, US housing starts and building permits are at 1330 BST, before Bank of England Governor Mark Carney speaks before the Lords Economic Affairs Committee at 1530 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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