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Stock Markets Bounce Back From Sharp Falls

The FTSE 100 has recovered from sharp falls to head higher after another volatile session driven by the fluctuating oil price.

London's leading share index had tumbled by 100 points in early trading after steep declines in Asian markets overnight, as the cost of a barrel of Brent crude slipped back below $30.

But it closed 34 points up with Brent crude topping $31 as it showed fresh signs of bouncing back from recent lows. US benchmark WTI was also up.

Markets in Frankfurt and Paris also saw strong finishes and Wall Street was ahead too at the time of the close in Europe.

Sentiment appeared to be buoyed by hopes of an agreement between oil cartel Opec and other oil producing-countries on tackling the glut of supply on world markets that has sent the price into freefall.

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The wider commodities sector saw gains too, with miner Anglo American (LSE: AAL.L - news) up 12% and other miners Glencore (Xetra: A1JAGV - news) , Fresnillo (Other OTC: FNLPF - news) and Rio Tinto (LSE: RIO.L - news) also strongly ahead.

Chris Beauchamp, senior market analyst at IG (LSE: IGG.L - news) , was sceptical about whether the Brent rally would last.

He said: "As oil goes, so goes the rest of the market. Yesterday a rapid decline in crude paved the way for stock markets to give up their gains, but today the price of black gold is on the up again, with the reliable market rumour of production cuts providing the foundation for both Brent and WTI to move back above $31 a barrel.

"Rallies in oil in recent months have only lasted a few days, and once talk of a deal dries up, the way will be clear for the downtrend to resume."

The latest oil price movements followed comments by the head of the OPEC cartel of oil-producing nations, who blamed smaller producers for the glut in supply.

Abdalla el Badri pointed to an "overhang" - or extra supply of oil in world markets - of 260 million barrels at the end of last year, with the majority of it created by non-OPEC members.

Many countries have been pumping oil at record levels to maximise revenues in the low price environment.

Mr el Badri said it was crucial that all major producers sit down to come up with a solution to the price slump - which last week saw Brent crude fall to below $28, its lowest level since November 2003.

It (Other OTC: ITGL - news) had peaked at above $115 in the summer of 2014.