By Barbara Kollmeyer, MarketWatch
London markets weren’t left out of a global rally on Friday, with the FTSE 100 poised for its best weekly return in around a month, as energy shares surged on hopes for pact by major oil producers to extend production cuts.
The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.51% climbed 1.2% to 6,420.94, and was poised to gain 5.7% this week. The U.K. index was tracking broad gains across global equities on Friday in what has been a mostly strong five days across the board.
The pound climbed 0.4% to $1.2645, even amid ongoing Brexit concerns. EU Chief Negotiator Michel Barnier said on Thursday that post-Brexit trade talks had ended without much progress, ahead of a summit later in June.
“With the BoE warning banks to begin preparations for a no-deal Brexit, we are likely to see markets increasingly price this possible disorderly exit from the EU as we move through the second half of the year,” said Joshua Mahony, senior market analyst at IG, in a note to clients.
Shares of Total /zigman2/quotes/206172043/delayed FR:FP -1.63% /zigman2/quotes/201824152/composite TOT -1.46% and rival oil-and-gas company Royal Dutch Shell Group /zigman2/quotes/205095589/composite RDS.A -2.11% /zigman2/quotes/207682964/composite RDS.B -2.65% climbed 4% each. That is as U.S. crude prices /zigman2/quotes/211629951/delayed CL.1 -4.21% and European benchmark Brent crude saw gains of more than 2% each.
Oil prices rose on optimism over a possible deal to extend production cuts. Iraq and Nigeria haven shown further committed to future agreements, ahead of a meeting planned for Saturday, The Wall Street Journal reported , citing delegates. The Organization of the Petroleum Exporting Countries and its allies are expected to meet on Saturday. Mahony said the FTSE 100 could get a bigger boost and catch up with stronger rallies for German and U.S. counterparts if that deal comes through.
Banks also powered ahead, with heavily-weighted HSBC Holdings /zigman2/quotes/203901799/delayed UK:HSBA -3.26% /zigman2/quotes/208272822/composite HSBC -3.03% surging 4% and Lloyds Banking Group /zigman2/quotes/200709414/composite LYG -1.91% /zigman2/quotes/202285510/delayed UK:LLOY -1.75% climbed 3%.
Airlines and travel groups got a big boost in London, with International Airlines Group /zigman2/quotes/208070069/delayed UK:IAG -3.60% surging 9% and Carnival /zigman2/quotes/210414141/delayed UK:CCL -0.19% rising nearly 12%. Those gains followed a surge in shares of American Airlines, up 19% in premarket trading on Friday. The airline surged a record 41% on Thursday, after indicating it was boosting capacity amid signs travel demand keeps improving.