Oil stocks in focus as OPEC kicks of meeting on production cuts
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After a wobbly start to the trading day, European stocks headed higher on Thursday. The pan-European index was lifted by broad-based gains in the banking sector, after Credit Suisse Group AG provided an upbeat outlook and vowed to return a large chunk of profits to investors.
Oil companies, however, were trading mixed as the closely watched OPEC meeting got under way in Vienna. Some of the world's largest oil producers will debate whether to extend their deal on production cuts, with investors watching how long that extension might be.
What are markets doing: The Stoxx Europe 600 index gained 0.4% to 389.46, on track for a third day of gains. For November, however, benchmark was on track for a 1.5% loss, which would be its biggest monthly decline since June.
Germany's DAX 30 index climbed 0.7% to 13,148.03, while France's CAC 40 index added 0.4% to 5,418.94.
The U.K.'s FTSE 100 index , however, underperformed the broader European markets for a second day, falling 0.3% to 7,374.67 (http://www.marketwatch.com/story/ftse-100-slides-to-2-month-low-as-pound-rallies-on-brexit-hopes-2017-11-30). The slide came as the pound rallied to a fresh two-month high at $1.3470 on further signs of a breakthrough in the Brexit negotiations (http://www.marketwatch.com/story/uk-closes-in-on-deal-with-eu-over-irish-border-times-2017-11-30). Sterling traded around $1.3410 late Wednesday in New York.
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The euro slipped to $1.1815, down from $1.1850 on Wednesday, after some underwhelming eurozone inflation numbers.
What's driving the market: Banks were again among biggest gainers, continuing Wednesday's push higher. That advance came after U.S. Federal Reserve Chairman-nominee Jerome Powell said he hopes to ease financial regulations. Many European banks do business in the U.S., so looser regulations stateside could also be a boon for them.
More positive news in the sector came out Thursday, when Credit Suisse Group AG (CSGN.EB)(CSGN.EB) raised its 2018 profit target (http://www.marketwatch.com/story/credit-suisse-pledges-to-return-50-of-profits-2017-11-30) for its wealth-management and connected business in Asia-Pacific. The bank also said it plans to increase returns to shareholders by distributing 50% of profit to them through share buybacks and special dividends.
Credit Suisse shares were up 2.2%. The Stoxx Europe 600 Banks index was 0.7% higher.
Investor optimism has been boosted recently by improved prospects for the passage of Republican-proposed tax reforms in Washington. The U.S. Senate began debating the tax bill on Wednesday, and a final vote could come as early as Thursday night (https://www.wsj.com/articles/senate-heads-toward-initial-vote-on-tax-overhaul-1511976620).
Brexit breakthrough: In the U.K., there were further signs London and Brussels could break the Brexit deadlock by Christmas. The Times newspaper said Thursday the U.K. is close to reaching an agreement over Northern Ireland (https://www.thetimes.co.uk/article/brexit-britain-close-to-irish-border-deal-pltcgrvcj) with the European Union's Brexit negotiators. The report said British officials earlier this week made a proposal to avoid a "hard border" between the U.K. province and the Republic of Ireland.
The EU has said it needs to see "sufficient progress" on the Irish border before the withdrawal talks can move on to deal with trade and a potential transition period. The two other issues are EU citizens' rights and the size of the U.K.'s exit bill.
Earlier this week, media reports said London and Brussels had agreed on a Brexit divorce bill of around EUR50 billion, after U.K. Prime Minister Theresa May significantly raised the British offer.
OPEC meeting: Traders are closely following a meeting of the Organization of the Petroleum Exporting Countries in Vienna that began early Thursday. OPEC members and a group of non-cartel countries are debating whether to extend their output agreement, set to end in March next year.
OPEC and Russia -- the de factor leader of the non-OPEC group -- appear ready to prolong production curbs (http://www.marketwatch.com/story/russia-riles-opec-plans-for-a-longer-production-cut-extension-2017-11-29) by another nine months. However, they may decide to include a review in June to assess demand, which could be a disappointment to traders.
See:This is the big question for oil traders as OPEC meets on Thursday (http://www.marketwatch.com/story/opec-oil-ministers-will-face-this-dilemma-when-they-meet-to-extend-production-cuts-2017-11-17)
"Any underwhelming move could easily result in a correction, whilst there is even a risk of a 'buy on rumor, sell on fact reaction' too. It may need to be something fairly impressive to prevent a correction," said Richard Perry, market analyst at Hantec Markets, in a note.
Crude oil prices were 0.2% higher at $57.42 a barrel, while Brent was up 0.3% at $62.74.
Among energy companies, shares of BP PLC (BP.LN) (BP.LN) were down 0.6%, Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) lost 1%, and Total SA (TOT) fell 0.1%.
Economic news: Eurozone inflation rose to 1.5% (http://www.marketwatch.com/story/eurozone-inflation-rises-to-15-on-energy-prices-2017-11-30) in November, according to a preliminary estimate from Eurostat, up from 1.4% in October. However, it missed consensus forecasts of a 1.6% reading.
Meanwhile, unemployment in the currency union fell to 8.8% in October from 8.9% in September, marking the lowest joblessness rate since January 2009.
Stock movers: Shares of Daily Mail and General Trust PLC (DMGT.LN) tanked 24% after the newspaper company said it swung to a pretax loss (http://www.marketwatch.com/story/daily-mail-swings-to-loss-on-impairment-charges-2017-11-30) in fiscal 2017.
Shares of Aviva PLC (AV.LN) rose 2.1% after the insurer lifted its forecast for annual earnings growth (http://www.marketwatch.com/story/aviva-lifts-earnings-growth-targets-2017-11-30) to more than 5% a year from 2019 onward.
(END) Dow Jones Newswires
November 30, 2017 05:37 ET (10:37 GMT)