Sector movers: Oil stocks climb on Opec relief, defensives feel trade heat

Oil and gas companies were the main upward force among London stocks on Monday, while drags came from automotive, tobacco and beverages.

Oil companies including Shell and BP were lifted as production cartel Opec said they would increase production by less than been feared.

A number of Opec countries are optimistic that a compromise agreement on boosting the cartel's output over the next few months can be reached. According to Bloomberg a compromise deal is under discussion to hike production by between 300,000 and 600,000 barrels a day.

Insurers RSA and Aviva rallied following a report in the Sunday Times suggesting that German insurer Allianz might be interested in acquiring them. Analysts at JP Morgan Cazenove observed that an approach for Aviva could potentially raise Allianz’s leverage from 26% to 35% and dilute its Solvency 2 ratio to 212%. RSA on the other hand would be cheaper and would raise Allianz’s leverage from 26% to 29% and dilute its Solvency 2 ratio to 219%.

Companies in defensive sectors such as tobacco and drinks were among big fallers, including British American Tobacco and Diageo.

Equities were in general being hit by China's talk of retaliation to US trade tariffs increases worries about a global trade war, said Mike van Dulken, head of research at Accendo Markets in a note to clients. "Whilst financials welcome some M&A among the challengers, the big drag on the index derives from defensive heavyweights, perhaps those most at risk of unwelcome trade barriers."

Top performing sectors so far today

Oil & Gas Producers +1.32%
Industrial Metals & Mining +1.11%
Insurance (non-life) +0.67%
Software & Computer Services +0.62%
Food Producers & Processors +0.59%

Bottom performing sectors so far today

Automobiles & Parts -4.86%
Tobacco -1.50%
Beverages -1.45%
Forestry & Paper -1.35%
Fixed Line Telecommunications -0.94%