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LONDON (Alliance News) - UK stocks had stemmed their earlier losses by midday Monday, as oil prices rebounded from a sell-off after talks between major oil producers in Doha concluded on Sunday with no agreement to freeze output.

Top oil producers delayed an agreement to freeze crude output levels to shore up low prices, saying they needed "more time for further consultations." The decision followed marathon talks in the Qatari capital of 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, but he did not give any more details. The minister added that OPEC members would meet in Vienna on June 2 to consider a possible freeze.

Bin Saleh also 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 their 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 that Saudi Arabia, the world's top oil exporter, demanded that any cap deal must be binding to all producers. In recent months, tensions have grown between Saudi Arabia and its regional rival Iran.

"If agreeing to a freeze of output among producers whose output is close to capacity is proving this difficult, then this exercise shows to the market that achieving a cut, should there be a need for one in the future, will be almost a non-starter," commented commodity analysts at Barclays

The analysts said the meeting exposed the deep political rift between Saudi Arabia and Iran, which ultimately doomed the agreement.

Looking ahead, Barclays places little importance on the new meeting in June, considering the fundamental rebalancing that is underway in the oil price.

"Physical oil market balances have tightened recently, helped by unplanned supply outages and a slowdown in non-OPEC supply growth. Over the weekend, fresh supply outages have been added, with strikes in Kuwait (reportedly affecting production there), further outages in Nigeria (Brass River) and Canada (Primrose)," the bank added.

West Texas Intermediate traded at USD38.91 a barrel, up from its earlier low of USD37.59. Similarly, Brent oil sharply rebounded to USD41.70 a barrel from an initial low of USD40.08 a barrel Monday. However, the North Sea benchmark remains below the USD42.80 a barrel seen at the London market close on Friday.

This meant that major oil producers weighed on the FTSE 100, with Royal Dutch Shell 'A' shares down 1.9% and BP shares down 1.3%.

At the other end of the index, travel stocks TUI Group, up 3.8%, easyJet, up 2.6% and International Consolidated Airlines Group, up 1.7%, benefited from the prospect of lower fuel costs.

The FTSE 100 was down 0.3%, or 16.81 points, to 6,326.94 at midday. The blue-chip index hit a low of 6,261.71 just after the open on Monday. The FTSE 250 was down 0.1% at 16,887.16, while the AIM All-Share index was up 0.1% at 733.04.

European stocks also were off their lows, with the CAC 40 in Paris down 0.2% and the DAX 30 in Frankfurt flat.

Ahead of the open on Wall Street, futures pointed the Dow 30 and Nasdaq 100 both down 0.2%, while the S&P 500 was indicated down 0.3%.

The focus will be on US first-quarter earnings, with bank Morgan Stanley and food, snack and beverage company Pepsico both reporting before the open. Morgan Stanley revealed a 39% fall in earnings but beat earnings-per-share expectations. Pepsico's profit rose 4% on the year before, and its EPS also beat expectations.

Technology and consulting company IBM and online-video streaming company Netflix report after the NY close.

On the London Stock Exchange, Reckitt Benckiser Group was up 1.7% after 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 traded down 2.0%. 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 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 traded up 39% to 680.03p, making it the best performer in the FTSE All-Share index.

Sprue Aegis was the biggest faller in the AIM All-Share, off 50%. The home safety products supplier downgraded its expectations for 2015 after it decided to increase its warranty provision following an issue with batteries from a third-party supplier.

Sprue Aegis said it has recently identified an issue in certain batteries from a third-party supplier which may cause a premature low-battery warning in some of Sprue's smoke alarm models sold in the UK and Europe.

Due to this, Sprue Aegis has increased its 2015 warranty provision to GBP6.8 million, compared to GBP900,000 a year earlier, a GBP5.5 million hike from the previous provision made for 2015.

Later in the economic calendar, the US National Association of Home Builders housing market index is due at 1500 BST.

Still ahead in the UK corporate calendar, miner Rio Tinto releases its operations review at 2330 BST.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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