LDN - Other News

Battered oil fights back, sterling hit as May's poll lead shrinks

[May 26, 2017] By Dhara Ranasinghe

LONDON (Reuters) - Battered oil prices recovered some ground on Friday as investors looked past disappointment that an OPEC meeting did not produce bigger supply cuts, while sterling slid on a poll showing the ruling Conservatives' lead shrinking, two weeks before an election.

European stock markets opened down as turbulence in oil markets following Thursday's OPEC meeting, at which oil producers extended existing output cuts but did not expand them, undermined sentiment towards risk assets in general. Asian shares also fell.

Some of the sharpest moves came in currencies, where Britain's pound fell over 0.5 percent to $1.2861 and looked set for its biggest one-day slide in over three weeks and steepest one-week decline since early April.

The first poll taken since a suicide bombing killed 22 people indicated that Britain's opposition Labour Party had cut May's Conservative Party lead to five points less than a fortnight before the parliamentary election.

"With this kind of momentum and almost two weeks to go until the vote, not only is this not going to be the breeze that May anticipated when she called the snap election last month, it could yet turn into a humiliating defeat for the Conservative leader and her party," said Craig Erlam, senior market analyst at OANDA.

"Coming on the back of losses yesterday, it's turning into a rotten end to the week for the pound."

Sterling's weakness, good news for exporters, helped keep London's blue-chip FTSE-100 stock index in positive territory just as other European bourses fell.

Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan, which closed at a two-year high on Thursday, fell 0.2 percent, shrinking its weekly gain to 1.45 percent. Japan's Nikkei closed 0.6 percent lower.

Trade in U.S. stock futures pointed to a muted start for Wall Street, where the S&P 500 and the Nasdaq closed at record highs on Thursday after strong earnings reports from retailers.

[to top of second column]

A worker shelters from the rain under a Union Flag umbrella as he passes the London Stock Exchange in London, Britain, October 1, 2008. REUTERS/Toby Melville/File Photo

OIL REBOUND

Oil edged higher but remained on the back foot after tumbling 5 percent in the previous session.

On Thursday in Vienna, the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers agreed to extend a pledge to cut around 1.8 million barrels per day (bpd) until the end of the first quarter of 2018 - disappointing investors betting on longer or larger curbs.

Clawing back some of Thursday's losses, Brent crude futures were at $51.80 per barrel at 0755 GMT, up 0.66 percent, from their last close. They were still set to end Friday with a weekly loss of more than 3 percent, however.

U.S. West Texas Intermediate (WTI) crude futures were below $50, at $49.15, though still up 16 cents from their last close.

Elsewhere, the dollar slipped 0.5 percent to 111.25 yen, while the dollar index, which tracks the greenback against a basket of six major peers, was 0.14 percent lower at 97.110.

The euro was virtually flat on the day at $1.1212.

The weaker dollar and pullback in risk appetite were a boon for gold. Spot gold rose 0.5 percent to $1,261 an ounce, poised for a 0.5 percent gain for the week.

(Additional reporting by Nichola Saminather in Singapore; Editing by Kevin Liffey)

Back to top