European stocks diverge as oil slides before OPEC meet

London / AFP

European stock markets mostly rebounded
on Tuesday but London extended losses as mining shares lost their shine, while oil prices slumped almost a dollar on the eve of a crucial OPEC meeting.
Asian traders had earlier moved cautiously, with the recent Trump-fuelled rally in stocks subdued by profit-taking, uncertainty over a key vote in Italy at the weekend and worries about an OPEC 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. Stocks worldwide have won strong support since Donald Trump 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, with the oil reduction plan in immediate focus. There are increasing concerns that members of OPEC will not be able to agree the details of an agreement in September to reduce output and support prices, with Iran and Iraq saying they should be exempt. OPEC members and non-members including Russia are scurrying to hammer out a deal before the group’s twice-yearly meeting on Wednesday.

‘HOPES AND FEARS’
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. “The hopes and fears about possible OPEC production cuts are continuing to dictate price fluctuations on the oil market,” Commerzbank analysts wrote in a note to clients.
There is also a growing nervousness about a weekend referendum in Italy on constitutional reform. 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.