European stocks diverge as oil skids before OPEC talks

European stocks diverge as oil skids before OPEC talks

European and US stocks mostly inched higher on Tuesday but London fell as oil prices slumped by nearly two dollars on the eve of a highly-awaited OPEC producers' meeting.

LONDON: European and US stocks mostly inched higher on Tuesday (Nov 29) but London fell as oil prices slumped by nearly two dollars on the eve of a highly-awaited OPEC producers' meeting.

Asian traders earlier moved cautiously, with the recent Donald Trump-fuelled rally in stocks subdued by profit-taking, uncertainty over a key vote in Italy at the weekend and worries about OPEC's plan to cut oil production.

"Equities are mixed, with the FTSE in the red on continued oil price volatility and metals prices pulling back from highs," said Mike van Dulken, head of research at traders Accendo Markets.

Paris' CAC 40 pushed higher, while the DAX in Frankfurt closed with a last-minute rally after a hesitant start to trading on Wall Street.

Stocks worldwide have won strong support since the Republican property tycoon was elected US president, on hopes that his spending policies will ramp up the world's top economy.

However, analysts said dealers were taking a breather as other issues come to the fore. All eyes are set on whether OPEC members agree on Wednesday to reduce the cartel's gushing crude that has long hurt producers and slashed prices.

Concerns are growing that members will not be able to agree the details of an accord in September to reduce output and support prices, with Iran and Iraq saying they should be exempt.

Prices also dipped on Tuesday when non-OPEC Russia confirmed it would not send a delegation to the talks.

Capital Economics' Tom Pugh said he believed the most likely outcome of the meeting was "some sort of face-saving deal".

"After all, the group will be well aware that a failure to come up with any agreement could see prices plunge back below US$40 per barrel and make it difficult for OPEC to convince the market that it is able to function effectively," he wrote in a note to clients.

US' STOP-START YEAR'

The uncertainty has fed volatility on oil markets, with both main contracts diving about four percent Friday but rebounding two percent Monday, before heading south once more.

Italy's referendum on constitutional reform is also setting nerves on edge.

Tensions between Italian Prime Minister Matteo Renzi and the European Union have reached boiling point ahead of the poll and he has suggested he would step down if voters reject the proposal.

There are fears his resignation could spark elections in which populist anti-euro parties could do well, and possibly even lead to the country leaving the EU.

The unease hit European financials on Monday.

Wall Street stocks rebounded moderately after dipping when trading began, as worries about OPEC overshadowed data revealing the world's largest economy grew even faster than initially thought in the third quarter.

According to a revised GDP report, the economy expanded at an annual rate of 3.2 per cent.

"The US economy has had a stop-start year, but Q3 data has shown signs of an upswing, adding fuel to the belief that US rates could be in for a steeper rise next year," CMC Markets analyst Jasper Lawler said in a note to clients.

On currency markets the dollar was mixed, having chalked up multi-month highs against most peers last week on expectations that US interest rates will rise in December and again next year.

Source: AFP/de

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