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FTSE 100 Index down as oil uncertainty hits energy stocks

Published 28/11/2016

The FTSE 100 was down by 0.4% at 6,812.12 points
The FTSE 100 was down by 0.4% at 6,812.12 points

Energy stocks dragged on London's top flight after investors questioned whether major producers would strike a deal to curb the globe's oil supply glut.

The FTSE 100 Index closed down 41.28 points at 6,799.47 after Royal Dutch Shell B tumbled nearly 2% or 39p to 2,072p, while rival BP sank 2.7p to 452.3p.

It comes after a meeting between Opec and non-Opec producers which was set to take place on Monday was cancelled following news that Saudi Arabia would not be sending a delegate.

It was slated to take place ahead of the official Vienna meeting on Wednesday, which investors hope will boost prices by ending in a deal to cut production.

Brent crude prices rebounded in afternoon trading after Iraq oil minister Jabar Ali al-Luaibi said he was "optimistic" that a deal in Vienna could be reached.

The price of oil was up 2.5% - or one dollar and 18 cents - to 48.42 US dollars a barrel.

Banking stocks also pulled the London market lower after investor jitters over Italy's referendum vote on constitutional reforms spread across European markets.

A Yes vote from the Italian public on December 4 would hand powers back to Italy's regions, making parliament's lower house - the Chamber of Deputies - more powerful than the Senate.

However, a no vote could be enough to topple Prime Minister Matteo Renzi's government, triggering a fresh bout of economic uncertainty.

Royal Bank of Scotland was among the biggest fallers, down more than 2% or 5.3p to 196.2p, while Lloyds Banking Group slipped 0.9p to 57.9p.

Across Europe, Germany's Dax slumped 1.1% and the Cac 40 in France dropped 0.9%.

On the currency markets, the pound was down 0.5% against the US dollar at 1.24 after the greenback strengthened.

Sterling was also 0.3% lower versus the euro at 1.17 despite the Organisation for Economic Co-operation and Development (OECD) revising up its forecasts for the UK economy.

It raised its projections for Britain's gross domestic product (GDP) from 1.8% to 2% for this year and from 1% to 1.2% for 2017. It expects UK growth to hit 1% in 2018.

However, it said the lack of clarity surrounding Britain's exit from the EU was a "major downside risk for the economy".

In UK stocks, Aberdeen Asset Management was nearly 4% off after being stung by £32.8 billion of outflows in the year to September 30.

The asset manager said "economic and political newsflow" was weighing on investor sentiment.

Shares were down 11.3p to 274.8p.

Sportswear retailer JD Sports rose 4% or 13.1p to 332.5p, following news that it has acquired Go Outdoors for £112.3 million from its private equity owners.

The biggest risers on the FTSE 100 Index were Randgold Resources up 245p to 5,965p, Fresnillo up 46p to 1,278p, Polymetal International up 24p to 769.5p, Centrica up 5.3p to 209.4p.

The biggest fallers on the FTSE 100 Index were Next down 131p to 4,820p, Royal Bank of Scotland down 5.3p to 196.2p, BT down 8.6p to 350.3p, Sky down 18p to 769p.

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