Britain’s top share index came under pressure on Monday after major oil producers failed to reach an agreement to freeze output over the weekend, sending shares in energy stocks lower.
Oil & gas companies were the top sectoral fallers after a deal to freeze oil output by OPEC and non-OPEC producers broke down on Sunday, sending oil prices tumbling.
OPEC’s de facto leader Saudi Arabia demanded that Iran, which was absent from the talks, join the global deal despite calls on Riyadh to save the agreement and help prop up prices.
Britain’s oil & gas index .FTNMX0530 was knocked off year highs hit last week, dropping 2.1 percent and on track for its biggest daily percentage loss in a month. Oil majors Royal Dutch Shell (RDSa.L) and BP (BP.L) fell 2.3 percent and 1.7 percent respectively.
“The fall in oil prices is sparking profit-taking as a marked slide in crude raises the question of whether BP and Shell will be able to maintain their dividend payments if oil remains lower for longer,” AJ Bell investment director Russ Mould said.
Weakness in oil also put pressure on the shares of mining companies, with the FTSE 350 Mining index .FTNMX1770 declining 0.4 percent. In addition, heavy rainfall in Chile forced some global miners to temporarily suspend operations, including Anglo American (AAL.L) which was down 0.7 percent.
The blue-chip FTSE 100 index .FTSE was down 0.3 percent in afternoon trading.
Britain’s largest energy supplier Centrica (CNA.L) was another notable faller, down 1.7 percent after it said it had lost more customers in the first quarter, highlighting continued pressure on the company’s market share from rivals.
Travel & leisure stocks led the gainers, helped by weaker oil prices. Broker Berenberg upgraded TUI (TUIT.L) to “buy” from “hold”, sending its shares 3.8 percent higher, while mid-cap Thomas Cook (TCG.L) gained nearly 1 percent after an upgrade to “hold” from “sell”.
Among small-caps, shares in Energy Assets Group (EASE.L) soared about 40 percent on the back of a $280 million takeover from Alinda Capital Partners. Sprue Aegis (SPRP.L) sank 51 percent after the home safety products supplier issued a profit warning.