LONDON MARKETS: FTSE 100 Closes At Record On Oil, Mining Stock Gains

By Carla Mozee, MarketWatch Features Dow Jones Newswires

TUI shares under pressure after results

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A rise in commodity shares on Monday led London's blue-chips benchmark to a record close.

The FTSE 100 index ended up 0.3% at 7,454.37, according to FactSet, surpassing its previous record close notched on Friday (http://www.marketwatch.com/story/ftse-100-rises-as-astrazeneca-rallies-and-pound-stalls-2017-05-12). Top gainers were the oil-and-gas and basic-materials sectors, while consumer-related shares lagged behind.

Market participants cheered the fresh all-time high, but some also worried that the narrow breadth of companies climbing may imply that a downturn, but not a correction--or pullback from a recent high of at least 10%--may be in the offing.

"What should worry FTSE bulls is that the index is exhibiting similar characteristics to the S&P 500--namely that the rally is being powered by smaller and smaller numbers of rising stocks each day; this doesn't mean a correction is around the corner, but it does raise the prospect of a reckoning that could be ugly," said Chris Beauchamp, chief market analyst at IG, in a note.

"The last time we saw this was in October, when a spike to 7,120 was followed by a swift 6% fall. Latecomers to this rally should tread carefully, lest they find themselves holding the bag," he said.

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During U.S. trade, the S&P 500 and the Nasdaq Composite indexes hit all-time intraday highs (http://www.marketwatch.com/story/us-stocks-poised-for-higher-open-as-saudi-russia-surprise-lifts-oil-prices-2017-05-15).

See:S&P 500 lifts from coiled spring, rattles cage on record territory (http://www.marketwatch.com/story/sp-500-lifts-from-coiled-spring-rattles-cage-on-record-territory-2017-05-15)

Oil upswing: In London, shares of BP PLC (BP.LN) (BP.LN) and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) ended up 0.9% and 0.5%, respectively. The shares of the oil producers rose along with Brent and U.S. crude futures , which popped up 3% during the session.

Oil and gas shares have a 14% weighting on the FTSE 100, according to FactSet.

The oil contracts climbed after Saudi Arabian and Russian energy ministers said they back a nine-month extension to production cuts (http://www.marketwatch.com/story/crude-oil-jumps-to-2-week-high-as-saudis-russia-back-continued-output-cuts-2017-05-15) led by the Organization of the Petroleum Exporting Countries.

"With only 10 days left until the meeting between major producers in Vienna [on May 25], we think that the near-term outlook of the precious liquid is to the upside," wrote Charalambos Pissouros, senior analyst at IronFX. "We believe that further optimistic comments from the various oil ministers regarding the prospect of an extension into 2018 is likely to keep oil prices supported heading into that meeting."

Miners shine: Shares of some metals producers were among top gainers on the FTSE 100 after China's President Xi Jinping over the weekend said there will be more than $100 billion in fresh financing (http://www.marketwatch.com/story/xi-casts-china-as-guardian-of-globalization-as-he-pledges-100-billion-to-one-belt-one-road-2017-05-15) to support its "One Belt, One Road" infrastructure program

Metals prices logged gains, led by a nearly 2% rise for platinum futures .

"[S]ofter-than-expected figures from China overnight are being overlooked, with retail sales, industrial production and fixed asset investment figures all falling short of expectations," wrote Oanda's senior market analyst Craig Erlam. "Double-digit growth in consumer spending remains a positive of the data, given the efforts to move away from a reliance on investment and exports."

See:China's economy slows in April in 'turning point' (http://www.marketwatch.com/story/chinas-economy-slows-in-april-in-turning-point-2017-05-15)

In other moves, shares of TUI AG dropped 4.8%. Their worst session since February came after the travel services company posted a slightly wider, first-half adjusted loss of $251.9 million euros ($273.9 million).

Sophos Group PLC (SOPH.LN) jumped 7.82% on the FTSE 350 Index as experts flagged the possibility of another massive cyberattack (http://www.marketwatch.com/story/anti-virus-stocks-rally-with-wannacry-cyber-attack-expected-to-go-on-the-rampage-again-2017-05-15). More than 200,000 computers in at least 150 countries were paralyzed last week by the so-called "WannaCry" malicious software.

The pound traded at $1.2920, up from $1.2887 late Friday in New York.

On Tuesday, a reading on April inflation is due from the Office for National Statistics. The rate on a year-over-year basis is forecast to rise to 2.5%, which would be the highest since September 2013, according to FactSet data.

The inflation rate is currently above the Bank of England's 2% target, and policy makers foresee it reaching just below 3% in the fourth quarter. Inflation has accelerated as a drop in the pound's value has pushed up prices for imported goods.

(END) Dow Jones Newswires

May 15, 2017 12:14 ET (16:14 GMT)