FTSE 100 preview: Shares up on US hope

By Reuters
Updated:

 

The FTSE 100 is seen opening up 12-14 points, or 0.3% on Monday, according to financial bookmakers, recovering some of the previous session's falls in tandem with modest gains overnight in Asia after Wall Street turned higher late on Friday.

Dealers monitor their screens on the trading floor of IG Index in London

Market watcher: Shares should rise this morning.

The UK blue chip index closed down 22.24 points, or 0.4% on Friday at 5,745.32, with heavyweight banks and commodity issues retreating following recent rallies after a below-forecast US jobs report revived worries over the strength of the world's biggest economy.

But US stocks shrugged off an early negative reaction to the jobs data to close out their best week in a month on Friday, helped by hopes for bigger quantitative easing moves by the Federal Reserve.

Speaking on the '60 minutes' television programme at the weekend, Fed chairman Ben Bernanke said the central bank could end up buying more than the $600bn in US government bonds it has committed to purchase if the economy failed to respond or unemployment stayed too high.

Asian equities excluding Japan, edged higher on Monday, responding positively to the US moves but pausing slightly after reaching three-week highs in the previous session.

The British Chambers of Commerce (BCC) on Sunday cut its expectations for UK economic growth next year, although it raised its forecasts for the following year.

The BCC reduced its forecast for UK gross domestic product (GDP) growth in 2011 to 1.9% from a previous forecast of 2.2% and raised its prediction for 2012 growth to 2.1% from 1.8%.

No important British data will be released on Monday, but it will be a busy week for numbers, with inflation, unemployment, and retail sales numbers all due.

US economic indicators this week, however, will be fairly light, with only the November employment index due on Monday.

The main focus will be on October US trade numbers and the first December reading for the Reuters/University of Michigan consumer sentiment index, both due on Friday.

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Investors will also keep an eye on Monday on a meeting of euro zone finance ministers, who face pressure to boost the size of a €750bn safety net for debt-swamped members in order to prevent contagion in the single currency bloc.

Technical factors, however, remain bearish for the FTSE 100.

'Should 5,784 hold as the short-term top then look for the start of a pull-back to 5,651 to 5,620. A break back into this area could qualify as a test of the main bottom at 5,519,' said James A. Hyerczyk, analyst at Autochartist.

'It is in this retracement zone that the bullish traders will either decide to step in to support the market or step away allowing the long-term weakness which began in the middle of November to continue,' added Hyerczyk.

Rio Tinto has made a $3.5bn bid approach for Africa-focused Riversdale Mining, a move likely to spark a bidding war for the Australian firm, which has hard coking coal projects in Mozambique. Riversdale also hinted it was talking to others.

Vodafone is close to selling its 44% stake in mobile phone operator SFR to France's Vivendi, paving the way for Vodafone buy back £5bn in its own shares in 2011, The Observer said on Sunday.

The newspaper said Vodafone was also close to announcing an £800m deal involving the disposal of its stake in Polish phone group Polkomtel.

Private equity group CVC is 'plotting an audacious bid' for the pub company Punch Taverns, the Mail on Sunday said in an unsourced report.

De La Rue declined to comment on Sunday on a Sky News report that it had rejected a takeover bid from French company Oberthur Technologies.

Yell Group is preparing an emergency review that could see it sell its US arm for £1bn, The Sunday Times newspaper said, without citing sources.

Activist fund Crystal Amber is targeting a boardroom seat at the struggling British sportswear retailer JJB Sports in which it holds a significant stake.

Easyjet issues November traffic figures.

There will be results today from Alternative Networks, Workplace Systems and GCM Resources.

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