London’s stock market rebounded on Tuesday, as shares in heavyweight energy companies recovered thanks to steadier oil prices, traders said.
The insurance sector was in focus also after a tie-up agreed between British companies Aviva and Friends Life, strongly lifting their shares prices.
“By and large, the sell-off we saw yesterday did seem to be a little overdone and… we are indeed seeing something of a rebound,” said Tony Cross, analyst at traders Trustnet Direct.
“Oil prices are off their recent lows but remain deeply discounted so this should be offering some respite to both the oil producers.”
London’s benchmark FTSE 100 index jumped 1.0 percent to trade at 6,724.75 points approaching midday in the British capital.
Elsewhere, Frankfurt’s DAX 30 fell 0.26 percent to 9,937.44 points and the CAC 40 in Paris edged up 0.11 percent to 4,382.10 compared with Monday’s close.
– Oil prices steadier –
Crude prices dropped on Tuesday after spiking the day before. Prior to this, oil futures had fallen sharply after OPEC’s decision last Thursday to hold output levels despite global oversupply.
In Tuesday trade, US benchmark West Texas Intermediate (WTI) for delivery in January shed $1.09 to $67.91 a barrel.
Brent North Sea crude for January lost 83 cents to stand at $71.71 in London midday deals, compared with Monday’s close.
“Crude oil prices experienced a radical turnaround yesterday,” said Commerzbank analyst Carsten Fritsch.
“After hitting a five-year low in the morning, Brent gained more than five dollars… (and) WTI climbed by nearly six dollars.”
Fritsch said Monday’s surge was likely to have been technical after a price drop of about 10 percent over two days of trading.
“What is more, there are the first signs that the low oil price level will result in shale oil output being cut,” he noted.
The Organization of Petroleum Exporting Countries last week decided to maintain its output at 30 million barrels of oil daily amid a US energy boom that has transformed America’s energy picture and the global petroleum market as a whole.
A surge in US oil production has weighed heavily on prices, which have slumped by more than one third since June. Analysts say by keeping the market oversupplied and consequently keeping crude prices low, OPEC is hoping to win back market share.