London pre-open: FTSE to move higher early on

3rd Apr 2014 07:39

UK stocks are set to start today's session on a positive note, tracking gains seen in the US ahead of the ECB's latest policy meeting and following positive Chinese services data as per the latest Services Markit/HSBC services purchasing managers index (PMI). City sources predict the FTSE 100 will open 10 points higher than yesterday's close of 6,659.04.US stocks gained for a fourth day on Wednesday, sending the S&P 500 to another record, as a decent increase in hiring in the private sector bolstered expectations for the official employment report due Friday.Overnight Chinese Services PMI came in showing a decent figure, climbing to a four-month high of 51.9 in March, up from 51 in February, lifted by strong levels of employment. HSBC's Chief China Economist, Qu Hongbin, said: "The HSBC China Services PMI suggests a modest improvement of business activities in March, with employment expanding at a faster pace."However, combined with the weaker manufacturing PMI reading, the underlying strength of the economy is softening, which should ultimately weigh on the labour market."Meanwhile, the European Central Bank (ECB) holds its policy meeting today at which the monetary authority is expected to keep policy unchanged.Despite calls for greater measures to tackle falling inflation and high unemployment, most analysts predict the ECB will keep interest rates at 0.25% and hold back stimulus measures despite pressure to tackle falling prices and high unemployment. Data this week revealed unemployment remained at 11.9% in February while inflation fell to 0.5% in March from 0.8% in February, well below the ECB's 2% target, fuelling concerns that the euro-area was headed towards deflation and a stagnant recovery. However, ECB Vice President Vitor Constancio said the Eurozone will probably avoid outright deflation as economic recovery gradually reduces spare capacity in the economy."The prospects for inflation are a cause for concern," Constancio said at a press conference in Athens on Tuesday. "If indeed the recovery consolidates, it means that the slack in the recovery is reduced, and that will help on that score."Today will also see the release of European retail sales, the ECB's interest rate decision, US continuing claims and initial jobless claims numbers, as well as the US balance of trade figures. In this morning's UK-listed company news, TUI Travel said it has signed a new £1.4bn bank credit facility to strengthen its balance sheet. The new facility extends the travel operator's debt maturity profit, providing flexibility in other debt facilities and upcoming maturities. SOCO International announced that it has appointed a new Chief Financial Officer who will join the company at the start of May from Bank of America Merrill Lynch, where she advised clients including SOCO, on a wide range of advisory, M&A and financing transactions. She originally advised on the sale of SOCO's Yemen assets in 2008, and subsequently on the sale of the company's Thailand assets and the buyout of the minority partner in SOCO's Vietnam subsidiary.B&Q and Screwfix owner Kingfisher has revealed that it is in exclusive negotiations to buy French home improvement retailer Mr Bricolage, which would add a third business to its two existing brands in the country. Kingfisher, which already operates in France through its Castorama and Brico Dépôt chains, said that the deal values Mr Bricolage at an enterprise value of around €275m including its debt.Homeware retailer Dunelm said total revenue for the third quarter grew by 9.9% and, with opportunities to expand its portfolio, said it is confident in its growth prospects. The group, which opened four new stores during the period, said like-for-like (LFL) sales for the quarter grew 5%.Broker Cowen has started coverage of BP and Royal Dutch Shell at 'market perform'. Investec has downgraded its view on shares of HSBC to 'hold' from 'buy'.NR