LONDON MARKET OPEN: Resource Stocks Support Higher Open As Oil Rises

LONDON (Alliance News) - Shares in London opened higher Wednesday, with resource stocks leading gainers as they recover from their losses from Tuesday, following comments from an OPEC official suggesting the possibility of an output freeze deal soon.

The FTSE 100 index was 0.5%, or 31.23 points, at 6,122.46. The mid-cap FTSE 250 was up 0.1% at 16,746.09 and the AIM All-Share was up 0.1% at 712.83.

All signs suggest a meeting of oil-producing countries in Doha, Qatar, on April 17 will deliver an agreement to freeze output, Reuters reported. The news agency cited Kuwait's OPEC governor and two sources, suggesting Iran's aim to raise supply will not scupper a deal aimed at supporting prices.

"There are positive indications an agreement will be reached during this meeting... an initial agreement on freezing production," she said. The OPEC governor is usually a country's No. 2 OPEC official, after the oil minister.

Reuters reported two other sources familiar with the issue said the initiative remained on track. "Yes, there will be a deal," said one of the sources, an OPEC delegate from outside the Gulf. "The freeze will be done."

Brent crude is quoted at USD38.59 a barrel Wednesday after the London equities open, compared to the USD37.66 a barrel at the close Tuesday.

Miners Anglo American, up 2.6%, BHP Billiton, up 1.5%, Antofagasta, up 1.3%, were among the best performers. Oil major Royal Dutch Shell 'A' shares were up 1.4%, while BP was up 0.6%. Tullow Oil, up 3.4%, was the best performer in the FTSE 250.

Oil was initially depressed by a report on Friday stating Saudi Arabia will freeze crude production only if Iran and others do so as well. Bloomberg reported that the kingdom's deputy crown prince, Mohammed bin Salman, signalled in an interview that, if any country raises output, Saudi Arabia will follow suit.

Investors will keep a close eye on the US Energy Information Administration crude oil stocks figures, due at 1530 BST.

In an otherwise thin economic calendar Wednesday, investors are expected to focus on the release at 1900 BST of the US Federal Reserve minutes from its monetary policy meeting held on March 15-16.

"Comments from Fed officials recently have been very mixed, reflecting the clear lack of consensus on the committee which makes the prospect of a hike in the short term seem very unlikely, especially with Fed Chair Janet Yellen sitting firmly in the dovish camp," said Oanda senior analyst Craig Erlam.

Elsewhere in London, easyJet was down 2.0%, the worst blue-chip performer, after it said the number of passengers carried rose in March year-on-year, but its load factor declined following cancellations due to strikes in France.

The low-cost airline said the number of passengers carried grew by 4.3% in March to 5.7 million from 5.5 million in the same month the year before. Load factor, however, declined by 1.3 percentage points to 91.3% from 92.6%. On a rolling 12-month basis, passengers rose by 7.2% to 70.8 million from 66.0 million, and load factor grew by 0.6 percentage points to 91.5% from 90.9%.

The news appeared to have a negative read across for British Airways-owner International Consolidated Airlines Group, down 0.8%, and FTSE 250-listed Wizz Air Holdings, down 1.0%.

Miner Glencore was up 0.8% after saying it has entered a deal to sell a 40% stake in its Agricultural Products business to Canada Pension Plan Investment Board for USD2.5 billion. The sale of the stake in the business values the agricultural arm, which owns agricultural origination and logistics assets across the world, at USD6.25 billion in total.

Glencore also said it has entered into an initial four-year lock-up period with Canada Pension Plan Investment Board to sell up to a 20% further stake in the business.

Mid-cap utility services provider Telecom Plus was down 1.9%, after being downgraded to Hold from Buy by Berenberg.

In London Main Market, HSS Hire Group was down 3.2%. The tool and equipment hire company said its full-year results had come in line with its expectations, with its pretax loss widening on higher depreciation charges and administration costs. Revenue rose 10% to GBP312.3 million for the year ended December 26 from GBP284.6 million the year earlier, but its pretax loss widened to GBP13.8 million from GBP8.5 million, as both cost of sales and administrative expenses ramped up.

In Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were both flat.

In Asian equities, the Japanese Nikkei 225 index ended down 0.1%. In China, the Shanghai Composite closed down 0.1%, while the Hang Seng index in Hong Kong is down 0.1%.

China's private sector activity expanded at the fastest pace in eleven months in March, driven by slightly stronger growth of services activity and a renewed expansion of manufacturing output, survey data published by Markit showed.

The Caixin composite output index climbed to 51.3 in March from 49.4 in the previous month. Any score above 50 indicates expansion, while a reading below 50 suggests contraction in the sector. The General Services Business Activity Index rose to 52.2 in March from 51.2 in February.

Meanwhile, Japan's leading index fell for the fourth consecutive month in February to the lowest level in more than four years, in line with expectations, preliminary survey results from the Cabinet Office showed.

The leading index, which measures the future economic activity, dropped to 99.8 in February from 101.8 in the previous month. The figure also matched consensus estimate. This was the lowest reading since December 2012, when the score was 98.9.

By Daniel Ruiz; danielruiz@alliancenews.com

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