LONDON: The FTSE 100 jumped to a two-month high on Tuesday, as oil stocks bounced back following a bullish comment on the sector by a brokerage and news that OPEC+ members were not discussing an oil output increase.
The commodities-heavy FTSE 100 closed 1% higher, to hit its strongest level since Sept. 13 and outperforming the pan-European STOXX 600 index.
Oil majors Shell and BP gained 4.8% and 6.5%, respectively, as crude prices gained after Saudi Arabia’s energy minister denied a report that said OPEC+ oil producers were discussing a potential output increase.
The surge in BP was also helped by Citigroup’s “buy” rating on the stock, up from “neutral”. The brokerage said it expects the rotation into energy stocks to continue.
Britain’s energy sector surged 5.3% and base metal miners added 2.6% as metal prices gained.
“This (FTSE move) seems commodity driven. That’s clearly highlighted but everywhere else we are just seeing a bit of choppiness,” said Craig Erlam, senior market analyst at Oanda.
Craig mentioned that US bank holiday later in the week could mean a quiet week for the markets.
Meanwhile, data showed Britain’s government borrowed less than expected in October, although the budget deficit is likely to balloon in the months ahead thanks to energy bill support measures and a slowing economy.