LONDON (Alliance News) - UK stock indices were posting marginal gains just after the open Monday, managing to overcome a drag from the oil sector, which is continuing to track falls in the oil price after the Organisation of the Petroleum Exporting Countries maintained its oil output on Friday.
OPEC, which accounts for about a third of world oil output, decided to maintain production levels despite an oversupplied market and low prices. At its press conference on Friday following a meeting, Nigerian Petroleum Minister Emmanuel Kachikwu explained that the cartel 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.
Oil prices plunged when reports suggesting OPEC will maintain its production levels were released on Friday, and continued to trade lower on Monday. At the open, Brent oil was priced at USD42.89 a barrel, down from USD43.04 at the London equities close on Friday, while West Texas Intermediate was at USD39.62 a barrel.
Oil-related stocks were feeling the burden of the low oil prices. In the FTSE 100, BP was the biggest faller, down 2.0%, while Royal Dutch Shell 'B' was down 1.5% and Royal Dutch Shell 'A' down 1.5%.
The FTSE 100 index was up 0.5% at 6,269.27, the FTSE 250 up 0.4% at 17,433.93, the AIM All-Share up 0.2% at 741.89. In Europe, the French CAC 40 index was up 0.7% and the German DAX 30 was up 1.1%.
Asian stocks ended mostly higher Monday. The Nikkei 225 index in Tokyo closed up 1.0%, the Hang Seng in Hong Kong closed down 0.1%, and the Shanghai Composite closed up 0.3%.
Serco Group shares were the amongst the worst performers in the midcap index, down 5.6%. The outsourcer said its trading for 2015 is set to come in ahead of previous guidance, but it still expects declines in revenue and trading profit in 2016.
Serco said trading in 2015 has been ahead of its expectations, with underlying trading profit set to beat its guidance and its reported trading profit to be significant higher than its underlying figures due to an improved operational performance or renegotiation on loss-making contracts.
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 were up 3.1% after the report.
On the AIM market, LGO Energy shares were down 11% after it said it has started a strategic review and entered an offer period following a separate statement in which it said its sale and purchase deal with Trinity Exploration & Production has been terminated.
LGO said it would consider "all options" for the future of the company as it kicked off its strategic review. The oil and gas company owns production assets and reserves in both Trinidad and Spain.
In the economic calendar, eurozone Sentix investor confidence survey results are at 0930 GMT and US labor market conditions index is at 1500 GMT. Bank of England Governor Mark Carney will be speaking in European Parliament at 1500 GMT ahead of the central bank's monetary policy decision on Thursday.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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