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European equities reach 3-week high on stronger energy stocks

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European shares climbed to a three-week high on Wednesday, staying on track to end the month in positive territory, with energy stocks racing higher on expectations of a deal to cut crude oil production to tackle oversupply.

The European oil and gas index rose 2 per cent as oil prices surged more than 5 per cent after an Iraqi delegate said that some form of deal would be reached at a Vienna meeting of members of the Organization of the Petroleum Exporting Countries (OPEC) to agree terms of a proposed production cut.

Energy companies helped the pan-European STOXX 600 to gain 0.3 per cent by 0902 GMT. It has risen by about 1 per cent in November after falling in the previous two months.

However, shares in state-backed British bank RBS fell 4.5 per cent after it failed the Bank of England’s stress test of seven British lenders and was told to boost its capital buffers.

“RBS is still the weak link in the UK banking chain, almost a decade after the financial crisis came close to wiping the bank out,” said Hargreaves Lansdown senior analyst Laith Khalaf. “… Unlike most of its peers, RBS doesn’t have the luxury of a dividend it can cut to support its capital position.”

Paul

The author Paul