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* STOXX Europe 600 index up 0.3 pct
* Energy stocks track firmer oil prices
* British bank RBS slumps after failing stress test
By Atul Prakash
LONDON, Nov 30 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
The European oil and gas index rose 2 percent as oil
prices surged more than 5 percent 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 percent by 0902 GMT. It has risen by about 1 percent
in November after falling in the previous two months.
However, shares in state-backed British bank RBS
fell 4.5 percent after it failed the Bank of England's stress
test of seven British lenders and was told to boost its capital
"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."
December is set to be an uncharacteristically busy month for
markets, with a referendum on constitutional reform in Italy on
Sunday, followed by a UK Supreme Court ruling on whether the
government can quit the European Union without an act of
The European banking index was broadly flat. It is
up nearly 3 percent this month after advancing more than 8
percent in October but remains down by about 14 percent this
Italian banks surrendered early gains and were
last down 0.3 percent, with investors staying cautious ahead of
Sunday's referendum, which has the potential to unseat Prime
Minister Matteo Renzi.
Bets on falls in Italian stocks and demand for insurance
against sovereign default have both picked up markedly this year
on growing investor concern ahead of the referendum, data
company HIS Markit said.
However, Jefferies is sticking with a contrarian bullish
call on Italian stocks, echoing views from some other fund
managers who believe that the expected failure of Renzi's
constitutional referendum will offer buying opportunities as
The broader European equities market was also underpinned by
some M&A news.
Linde shares advanced 7 percent after the German
industrial gases group received a fresh approach from U.S. rival
Praxair for a merger of equals.
Elsewhere, British packaging company RPC Group hit a
record high and was last up 9.4 percent, the biggest STOXX 600
gainer, after reporting a 53 percent rise in first-half revenue.
(Editing by David Goodman)