UKX FTSE 100 Index

By Sara Sjolin, MarketWatch

Capita slumps after profit warning

U.K. stocks rallied on Thursday, with resource companies leading the charge higher as investors cheered a decision by the Organization of the Petroleum Exporting Countries to reduce oil production.

The FTSE 100 index rallied 1.1% to 6,924.44, setting it on track for its highest close since mid-August.

The positive open in London came "almost entirely courtesy of last night's surprise OPEC production cut agreement," said analysts Mike van Dulken and Henry Croft at Accendo Markets, in a note.

Late Wednesday, OPEC members agreed on the need to cut oil output (http://www.marketwatch.com/story/opec-reaches-agreement-on-need-to-cut-oil-output-2016-09-29), announcing a preliminary deal to reduce output by about 700,000 barrels a day. The news sent oil prices sharply higher, which helped boost energy shares and overall market sentiment in Europe, Asia and the U.S.

However, the OPEC plan has yet to be finalized at the cartel's November meeting, leaving investors skeptical that the members will actually commit to implementing the cuts.

"Digging down, it's merely an intention to agree something concrete further down the line. Details on who will cut and by how much are distinctly lacking and only likely to surface end-November. Plenty of work still to do and enough time for a supposed 'deal' to be scuppered," the Accendo analysts said.

Still, oil companies and the wider commodity sector rallied on the London index on Thursday. Shares of Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) jumped 5.6% and BP PLC (BP.LN)(BP.LN) gained 4.5%. Tullow Oil PLC (TLW.LN) climbed 7.9% on the FTSE 250 index .

Among miners, Anglo American PLC (AAL.LN) advanced 4.7% and Glencore PLC (GLEN.LN) put on 3.6%.

Read:Why China is the oil 'wild card' that could overrule any OPEC moves (http://www.marketwatch.com/story/why-china-is-the-wild-card-that-could-overrule-any-opec-moves-2016-09-27)

Other movers: On a more downbeat note in London, shares of Capita PLC (CPI.LN) sank 28% after the support-services company issued a profit warning (http://www.marketwatch.com/story/capita-warns-on-profit-second-half-below-views-2016-09-29).

Merlin Entertainments PLC (MERL.LN) lost 4.6% after the theme-park operator said like-for-like sales have grown just 1.3% so far this year (http://www.marketwatch.com/story/merlin-revenue-rises-despite-security-concerns-2016-09-29).

Outside the main index, Daily Mail & General Trust PLC (DMGT.LN) rose 0.9% after the publisher said its outlook for the full year (http://www.marketwatch.com/story/daily-mail-outlook-in-line-with-views-2016-09-29) is in line with expectations.

(END) Dow Jones Newswires

September 29, 2016 04:36 ET (08:36 GMT)

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