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FTSE 100 steadies as oil shares recover

City traders Image copyright Getty Images

(Close): The London market recovered from early losses, which had been triggered by a slide in oil companies after crude prices plunged.

After falling 1% at the start of trade, the FTSE 100 closed 9.77 points, or 0.15%, higher at 6,353.52.

Oil company shares were initially among the biggest fallers after oil producers failed to agree an output freeze at their weekend meeting in Qatar, but clawed back most of their losses.

BP dropped 0.04% and Shell fell 0.7%.

The price of Brent crude fell by 7% at one point in reaction to the news from Qatar before recovering slightly.

The meeting in Qatar was attended by most members of oil producers' group Opec, including Saudi Arabia, but not Iran.

After hours of talks, Qatar's energy minister Mohammed bin Saleh al-Sada said the producers needed "more time".

Saudi Arabia, the world's biggest exporter, had been prepared to freeze output if all Opec members had agreed.

But Iran is continuing to increase output following the lifting of sanctions against it.

Other firms to suffer from the slide in oil prices included British Gas owner Centrica, which dropped 1.6%.

Joshua Mahony, market analyst at IG, said that following the lack of agreement in Qatar, "anxiety, instability and unpredictability within the commodities market will dominate the state of play across the majority of financial markets".

Travel-related shares were boosted after Berenberg upgraded Tui Travel to "buy" from "hold". Shares in Tui rose 2.3%, and elsewhere in the travel sector Easyjet climbed 0.7% and Intercontinental Hotels closed 1.4% higher.

On the currency markets, the pound rose 0.5% against the dollar to $1.42680, and ticked up 0.1% against the euro to €1.26090.