FTSE 100 stocks fell on Monday, dragged down by bank worried about a vote in Italy and oil investors fretting over OPEC’s much-anticipated supply cut meeting this week.
FTSE 100 blue-chip index closed down 0.6% at 6799 and led by retailer Next plc (LON:NXT) down 2.7% 4820p.
Second-biggest decliner was RBS (LON:RBS) down 2.6% to 196.2p while Lloyds Banking Group plc (LON:LLOY) lost 1.6% to 57.86 after financial services stocks across Europe were hit by nerves surrounding Italy's banking sector ahead of a referendum on constitutional reforms next weekend.
Reports suggest several Italian banks could be in trouble if Italian prime minister Matteo Renzi fails to win backing for the reforms.
The UK banking sector was also waiting for the results of the latest bank stress tests, which will be published by the Bank of England on Wednesday.
Shares in oil giants Royal Dutch Shell (LON:RDSB), down 1.9% to 2072p and BP (LON:BP. down 0.3% to 453.73p, fell as the price of oil fluctuated ahead of a meeting of the OPEC oil producers this week.
Oil prices had fallen 3% on Friday, and they slid again on Monday before recovering.
OPEC meets on Wednesday, but it remains uncertain whether the group will agree cuts to oil output in order to rein in global oversupply.
Investors have ratcheted up expectations for volatility in the oil market to the highest level in more than eight months amid growing uncertainty over whether OPEC members will forge an agreement at its meeting this week to curb output.
The CBOE’s crude oil ETF volatility index has surged by 21 points since late October to 53.5 – its highest level since March.
In the FTSE 250, shares in JD Sports (LON:JD. rose 3.4% to 330.1p after the retailer said it had bought the 58-store Go Outdoors chain for £112.3mln.
But the top decline in the FTSE 250, which itself fell 0.5% to 17,518, was hedge fund group Man (LON:EMG) down 4.6% to 118.1p after Man Group was downgraded by Exane BNP Paribas to 'neutral' from 'outperform'.
Late session
FTSE 100 down 25 points to 6,814
Gold perks up
Lavendon's fate up in the air as Loxam makes bid approach
FTSE 100 was under pressure as investors struggled to find reasons to buy in the face of a key OPEC meeting and more possible legal action over Brexit.
London’s index was 25 points lower at 6,814 with Wall Street also expected to open down as US investors come back from their four-day Thanksgiving weekend.
Gold miners were among the best of the risers as the precious metal bounced from its recent lows.
Randgold Resources PLC (LON:RRS) and Fresnillo PLC ( LON:FRES) both made handy gains.
Royal Dutch Shell (LON:RDSB) drifted ahead of the OPEC meeting (29,30) where analysts are sceptical any deal to curb production from the cartel will be forthcoming. Shell eased 1.5% to 2,078p.
Among the small caps a bid of activity kept things busy.
Raised platform group Lavendon (LON:LVD) has received a second offer from a group called Loxam, which released a statement this morning telling the markets that it was in preliminary takeover talks with Lavendon about a possible cash offer.
Today’s news comes only a week after Belgian firm TVH launched a final £348mln or 205p ‘take-it-or-leave-it’ bid. Shares rose 8% to 220p.
BOS GLOBAL HOLDINGS (LON:BOS) also continued its recent rise after the productivity solutions provider received an international patent for its BOS 360 Work Patterns platform at the end of last week. Today they were up 28% to 12.7p.
9.48..FTSE 100 dragged lower by banking concerns
With the annual Bank of England stress tests for the banks due this week, banking shares are causing the FTSE 100 a bit of stress.
The top-share index was down 61 points at 6,780, with financials featuring heavily among the big losers.
State-owned Royal Bank of Scotland Group PLC (LON:RBS) was the morning’s biggest blue-chip faller, down 2.9%, with Barclays PLC (LON:BARC), down 2.1%, and Lloyds Banking Group PLC (LON:LLOY), down 1.9%, not far behind.
Elsewhere in the financial sector, stockbroking and wealth management giant Hargreaves Lansdown PLC (LON:HL. was down 2.1% and asset manager Schroders PLC (LON:SDR) was off 1.7%, but the latter’s sector peer, Aberdeen Asset Management PLC (LON:AND) advanced 2.5% as it revealed assets under management rose from £283.7bn to £312.1bn in the year to the end of September despite volatile and challenging market conditions.
Oil companies are getting it in the neck ahead of this week’s meeting of the oil producers’ cartel Opec this week. We’ve been led up the garden path by Opec officials saying there is a consensus in favour of a production freeze and, as usual, when push comes to shove, it looks like self-interest will reign.
Brent crude for January delivery was trading 1.1% lower this morning at US$46.72 a barrel, dragging down the likes of Royal Dutch Shell PLC (LON:RDSB), down 1.8%, and BP PLC (LON:BP.), down 1.9.
In contrast, mining stocks defy the trend, especially the precious metals miners.
Blue Star Capital PLC (LON: BLU), an investing company in technology and gaming, shot up 15.6% to 0.185p, despite pre-tax losses widening to £165,005 from a loss of £106,370 the year before and net assets at the end of September declining to £1.76mln from £1.88mln a year earlier.
The directors have opted to defer taking their salaries for the last three months.
In-play aerial platform provider Lavendon Group plc (LON:LVD) is still advising shareholders to take no action, after another potential bidder emerged from the woodwork.
Loxam SAS, the rental equipment company, has made a preliminary approach to Lavendon regarding a possible cash offer and talks are in progress.
Last week, Lavendon rebuffed a 205p per share cash bid from Belgian industrial equipment provider TVH Group.
8.48 ... Slip-sliding away
Not quite the pedestrian start we expected.
The FTSE 100 lost around 60 points in opening deals and fell to 6,780.86 amid more Brexit uncertainty and a potential election challenge in the US.
Oh, and to cap it all OPEC looks no closer to agreeing production cuts than it was a year ago ahead of a meeting of the cartel later this week.
No surprises then that the oilers were among the early fallers as Brent crude prices drifted to around US$47 a barrel.
According to the BBC, the government is facing a legal battle over whether the UK stays inside the single market after it has left the EU.
Lawyers say uncertainty over the UK's European Economic Area membership means ministers could be stopped from taking Britain out of the single market.
They will argue the UK will not leave the EEA automatically when it leaves the EU and Parliament should decide, the BBC report says.
In the US, meanwhile, the war of words is ramping up ahead of a potential recount on Wisconsin.
6.45am...quiet start predicted
The FTSE 100 looks set for a quiet start with the index of blue-chip shares expected to open 2 points higher at 6,842.75.
Asia offered little direction overnight with China’s two main markets (Shanghai and Hong Kong) trading higher, while Japan’s Nikkei 225 and the Australia’s ASX lagged.
The main news of the week will be generated from Vienna, where the members of the OPEC oil cartel meet Wednesday.
The closer we get to the gathering the more unlikely a cut to output appears.
Iran and Iraq can’t agree a deal to turn down the spigots, while leading light Saudi Arabia said it plans to shun a pre-conference get together with big non-OPEC oil producers such as Russia.
Brent crude, which was down 2% overnight at one point, recovered some ground to trade 24 cents lower at just over US$47 a barrel.
“If there is no deal oil prices could fall further, and back below the July lows just above $40 a barrel,” said Michael Hewson, analyst at CMC Markets.
“All this uncertainty is likely to mean that oil markets are likely to remain choppy as OPEC and non-OPEC oil ministers toy with the oil market.”
Back here in the UK, the important scheduled announcements are back-end loaded.
Builder Berkeley Group reports on Friday, Daily Mail & Trust shares its news on Thursday and software specialist Sage will check in on Wednesday.
- Gold trading US$16.40 an ounce higher at US$1,194.80.
- Pound worth US$1.2511.
Bids and rumours
- Ladbrokes Coral is reportedly weighing up a bid for Australia’s largest bookie in a deal that would cost the betting giant more than £2bn.
- Poundland is considering offloading about 80 stores after the protracted takeover of its rival 99p Stores.
- Warpaint London, a cosmetics group founded by two former market traders will make its stock market debut on Wednesday after raising £23mln in an AIM listing valuing the company at £62.6mln.
Business headlines
- Barclays will bring its banking and investment services together in an overhaul of its 30-year old stockbroking operation to help the bank take on investment advisory rivals such as Hargreaves Lansdown – FT.
- Ministers have backed away from threats to break up National Grid, the FTSE 100 power group, which instead will be ordered to put in place stricter Chinese walls to prevent conflicts of interest in its role operating Britain’s electricity system – FT.
- Large shareholders in Rio Tinto have voiced concerns about the miner’s handling of a payments crisis in Africa, accusing it of failing to stand behind senior executives in the face of possible anti-bribery investigations – FT.
- Investigators are looking into whether Tesco Bank ignored a warning about a security flaw in its payment system that allowed fraudsters to steal millions of pounds from the accounts of thousands of its customers – Times.
- Rising costs and sluggish levels of business have dented both profits and optimism among services companies in the past three months, according to figures from the CBI – Times.
- Mark Carney is set to warn Brussels that the European financial system faces a shock unless policymakers give institutions more time to adapt to trading arrangements after Brexit – Telegraph.
- Boeing faces a US$9bn hit for illegal subsidies in the latest battle in a long-running transatlantic trade war. The World Trade Organisation is expected to say this week that tax breaks given to the US plane-maker broke international rules, and it will have to pay them back – Telegraph.
- Rolls-Royce faces fresh embarrassment after it admitted parts of its financial forecasts were wrong and it had to send out a correction – Telegraph.