* Oil soars amid signals of OPEC production cut
* Dollar gains after stellar November
* European oil stocks rise, banks struggle
* Gold heads for biggest monthly fall since mid 2013
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, Nov 30 Oil jumped more than 8 percent
and the dollar, U.S. bond yields and stocks all pushed higher on
Wednesday as signals from OPEC suggested the group was closing
in on a deal to cut production.
Combined with fresh concern about China's banking system, a
stress test for British banks and a raft of euro zone data, the
OPEC meeting topped off a wild November for financial markets
that has been dominated by Donald Trump's victory in the U.S.
An OPEC source told Reuters an agreement had been reached in
line with an preliminary deal agreed in Algiers in September, to
cut the groups output ceiling to 32.5 million barrels per day
from 33.6 million now.
Brent oil was just starting to level off, having
surged above $50 a barrel after OPEC's secretary general said
earlier a deal would be agreed as he headed into a meeting of
the group in Vienna
Top oil producer Saudi Arabia said a deal was close despite
some loose ends. Iran, which is considered crucial to a
breakthrough because its output has been rising after western
sanctions were lifted, said it was also "optimistic".
"I think we are looking at a very positive meeting," added
UAE Energy Minister Suhail bin Mohammed al-Mazroui, who was
echoed by counterparts from Angola, Algeria and Nigeria.
A possible rise in oil prices has also been feeding
expectations for a rebound in global inflation. Those
expectations have been gathering momentum since Trump promised
$1 trillion of new spending on U.S. infrastructure.
It has meant an electrifying run for the dollar, which was
up at 1.0645 per euro and 113.04 yen as U.S.
trading began and as it headed for its strongest month against
the Japanese currency in seven years.
Bumper U.S. jobs data meant Wall Street was set
to start higher while U.S. Treasury yields --
the benchmark for global borrowing costs -- were also rising
after a two-day pause. They hovered just under 2.36 percent,
having started November at just over 1.8 percent. The climb is
the biggest monthly move since December 2009.
"There have been more optimistic noises (about OPEC deal)
this morning and through into the afternoon session (here), and
those hopes of a deal also encouraged U.S. yields to rise," said
Jeremy Stretch, head of currency strategy for CIBC Global
Markets in London.
European stocks were lifted by a jump in oil companies
amid the OPEC talk, although banks struggled as Royal
Bank of Scotland failed a Bank of England stress test
and Italian lenders fell before a referendum on the country's
political system on Sunday.
Worries about China's financial sector had also spread in
Asia overnight. Shanghai stocks fell about 1 percent amid
concern about government moves to stem capital flight and halt
the recent sharp fall in the yuan.
"The stress could continue for a while," said Gu Weiyong,
chief investment officer at hedge fund Ucom Investment Co.
"Whether the situation gets better depends on the willingness of
the central bank to inject more liquidity into the system."
Emerging stocks rose marginally but were headed
for their biggest monthly fall since January. Currencies hit by
the latest onslaught from the dollar were also set to close
November with hefty losses.
The Turkish lira and Mexican peso have lost
around 8 to 9 percent versus the dollar for their biggest
monthly declines since 2008 and 2012 respectively.
And it is not only riskier assets that have suffered. Gold
is on track for its biggest monthly decline since mid
2013, largely pressured by the bets of a series of U.S. interest
rate hikes over the next year.
The euro has fallen over 3 percent. Euro zone
inflation for November came in at 0.6 percent year-on-year on
Wednesday. That was its highest in two years, although still
well below the European Central Bank's preferred level of just
under 2 percent.
The ECB meets next week, and with expectations that the bank
will extend its stimulus programme, already at more than 1.5
trillion euros, euro zone government bond yields nudged lower on
A Reuters report that the ECB was ready to temporarily step
up purchases of Italian government bonds if its borrowing costs
spiked was also a driver.
"This reaction function does indicate that the ECB is aware
of the important support that quantitative easing lends to the
(euro zone) periphery," ING strategist Padhraic Garvey said.
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