Oil stocks boost FTSE 100 Index as Opec reaches deal to cut output
Oil stocks topped the FTSE 100 Index after Opec said it had reached a deal to cut output for the first time since 2008, in a move that is expected to tackle the supply glut and support floundering prices.
The UK's blue chip index rose 0.17% or 11.79 points to 6,783.79 points.
It was led higher by Royal Dutch Shell's "B" shares, up 87p to 2,118.5p, and BP, up 16.9p to 459.45p
Sterling struggled to find direction and was relatively flat against the US dollar at 1.248, and up 0.6% against the euro at 1.179.
Brent crude prices spiked as much as 9% to 51.49 US dollars per barrel following news that the Opec oil cartel had agreed to reduce production by around 1.2 million barrels a day to a total production of 32.5 million barrels per days from January 1 2017.
The move is expected to push up prices, which have tumbled more than 50% since their June 2014 peak amid a growing supply glut.
Jasper Lawler, a market analyst at CMC Markets, said: "Co-operation does appear to have trumped competition, with even Iraq agreeing to cut output despite the difficulties the country faces in fighting Isis (Islamic State).
"The deal is contingent on non-Opec members also slashing output by 600,000 barrels per day, with Russia reportedly having already committed to cutting its own output by 300,000."
Indonesia has suspended its membership of the organisation because it could not agree to the terms of the deal.
Across Europe, the French Cac 40 and German Dax closed higher, up 0.59% and 0.19% respectively.
News of the Opec cut overshadowed the Bank of England's stress test results, which were released on Wednesday morning.
Royal Bank of Scotland shares slumped 2.7p to 194.3p after it unveiled plans for more asset sales and cost cutting, meant to help bolster its capital cushion by £2 billion after failing the Bank's stress tests.
Barclays rose 1.7p to 215.95p and Standard Chartered nudged higher by 9.8p to 641.1p despite also stumbling in the latest health check of the bank sector.
HSBC and Lloyds rose 3.4p to 635.2p and 0.16p to 57.87p respectively as they were given a clean bill of health alongside Santander and Nationwide Building Society.
Away from the top tier index, property website Zoopla rose 15.9p to 334.9p after reporting a 44% increase in annual profits and said it was well placed to withstand any negative impact caused by the Brexit vote.
Greene King shares fell 25.5p to 686p as the pub group reported record half-year revenue topping £1 billion, but warned of a "more challenging" consumer environment as regulatory costs and weaker economic growth hit the industry.
Shares in Britvic rose 23.5p to 571.5p after the Robinsons squash firm said it will shave another £5 million off its annual costs as it warned 2017 would be another "challenging" year amid rising inflation from the Brexit-hit pound.
The biggest risers on the FTSE 100 were Royal Dutch Shell 'B' shares up 87p to 2,118.5p, Royal Dutch Shell 'A' shares up 77p to 2,026p, BP up 16.9p to 459.45p and Ashtead Group up 56p to 1,567p.
The biggest fallers on the FTSE 100 were Capita down 33p to 524.5p, Fresnillo down 34p to 1,200p, Sage Group down 18p to 657.5p, and Rio Tinto down 77p to 2,990p.