FTSE preview: Shares up; Home Retail due

By Reuters
Updated: 02:54 EDT, 20 April 2011

The FTSE 100 is seen opening up, extending Tuesday's rally in tandem with gains in Asia and on Wall Street as some strong corporate results build up optimism about the earnings season.

Taking stock: London is expected to rally again.

The UK blue chip index closed 26.79 points, or 0.5% higher on Tuesday at 5,896.87, recovering some of the sharp falls made in the previous session thanks mainly to strength in oversold commodity issues.

US blue chips closed 0.5% higher on Tuesday and Asian equities posted good gains on Wednesday, with tech shares leading the way after US chipmaker Intel posted better-than-expected sales and forecast quarterly revenues well above analyst estimates, while computer maker IBM reported profit and revenue ahead of analysts' projections.

On the macroeconomic front, minutes from April's Bank of England Monetary Policy Committee meeting will be released on Wednesday. The committee once again decided to keep UK interest rates at a record low of 0.5%.

Economists do not expect the minutes to show a shift in the MPC members' voting, but they are keen to see if those who voted for unchanged rates have become more concerned about future inflation or the growth outlook.

'With inflation falling in March, the main argument of the hawks has lost some of its weight. With the economy still looking far from being on the road to recovery, it is unlikely that any member has changed their voting behaviour,' said Jonathan Sudaria, night dealer at Capital Spreads.

Across the Atlantic, the third of this week's data releases on the state of the US housing market will be released, with existing home sales seen up 2.5% in March, after a 9.6% decline in the previous month.

Ex-dividend factors will knock 5.09 points off the FTSE 100 index on Wednesday, with BAE Systems, GKN, Kazakhmys, Legal & General, Petrofac, Reed Elsevier, Resolution, and Xstrata all losing their dividend attractions.

BHP Billiton warned in a production update that persistent rains in Australia were delaying a recovery in its coal operations after a devastating March quarter cut production by nearly a fifth.

The company's iron ore mines in Western Australia, which were also hit by the torrential rains between January and March, recorded a modest 7% quarter-on-quarter rise in output, still setting the division on course for a record year.

Xstrata will pay Australia's Exco Resources A$175m for copper prospects, which will enable it to expand its nearby Ernest Henry mining operation, it said on Wednesday.

On the first anniversary of the Deepwater Horizon rig explosion in the Gulf of Mexico, the chief executive of ExxonMobil, Rex Tillerson, has said BP lost valuable time during the disaster by pursuing solutions to contain the oil spill that would never succeed, The Financial Times said.

British banks still pose a big risk to public finances and must end their dependence on taxpayer support, a report by lawmakers said on Wednesday.

There will be results today from Reckiit Benckiser and Home Retail Group, with updates coming from Bunzl, DS Smith, Hochschild Mining and International Ferro Metals.