September 29, 2016 / 8:50 AM / 3 years ago

European equities get energy boost; Capita slumps 30 pct

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* STOXX Europe 600 index up 1 pct

* Energy shares rally after OPEC deal

* Capita sinks 30 pct after profit warning

By Atul Prakash

LONDON, Sept 29 (Reuters) - European equities climbed higher on Thursday, with energy shares rallying after oil prices surged overnight following a deal by OPEC members to limit crude output.

The Organization of the Petroleum Exporting Countries reached an agreement in Algiers to cut production to a range of 32.5-33.0 million barrels per day. OPEC estimates its current output at 33.24 million bpd.

The European oil and gas index soared 4.8 percent and was poised for its best day in seven months. Tullow Oil jumped 8.4 percent, while heavyweights Royal Dutch Shell , Total and BP were up 4.5-5.7 percent.

“The OPEC agreement will make the return to market equilibrium in the oil market easier and faster. Oil prices going substantially above $50 a barrel could now happen in the spring of 2017,” said Ronny Claeys, senior strategist at KBC Asset Management.

“It is good news for oil companies, which can outperform over the next six months.”

However, some analysts said there was no certainty that the move would take away the oversupply in the oil market as several non-OPEC countries like Russia were pumping oil at an increased level and U.S. shale supply could increase again.

“Nevertheless, this action will at least put a bottom under oil prices and the energy sector. Whether this will be the start of a new bull market will depend on the details of the deal,” said Philippe Gijsels, head of research at BNP Paribas Fortis.

The pan-European STOXX 600 was up 1 percent by 0807 GMT, recording its third straight day of gains, also helped by stronger mining shares.

The European basic resources index rose 2.8 percent as prices of major metals advanced. Shares in Anglo American rose 4.6 percent, the highest since the middle of 2015, while Glencore rose 3.5 percent to its highest level in more than one year.

However, Capita slumped 30 percent to a four-year low and was on track for its worst one-day performance ever, after the British outsourcing group cut its full-year profit outlook, the second support services group to warn that clients were delaying decisions following Brexit. (Editing by Toby Chopra)

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