London pre-open: Stocks seen lower amid rising global tensions
London stocks were set to drop at the open on Tuesday following sharp losses in Asia overnight amid rising global tensions.
The FTSE 100 was called to open 38 points lower at 7,004.
London Capital Group analyst Jasper Lawler said: "Big swings in the Chinese markets continued, with the previous two-day rally moving sharply into reverse. After mulling over Chinese stimulus plans the market is seeing these stimulus measures as cushioning a fall rather than boosting the economy. The yuan has displayed this glass half full sentiment all along as it remains little changed around a 21 month low.
"Asian markets traded firmly lower, with European bourses also set to open to a sea of red. Sentiment continues to take a hit from a combination of geopolitical tensions including the growing isolation of Saudi Arabia, Italy’s defiant stance towards the ECB and Brexit."
Lawler said Trump's warning on Monday that he was not satisfied with Saudi Arabia's response over the killing of journalist Jamal Kashoggi has unnerved markets.
"Trump is censuring Saudi behaviour, yet he is showing a rare reluctance to jump in and punish the key ally and oil producer. Oil moved lower last night, a reflection of Trump’s reluctance to act and after Saudi Arabia pledged to play a responsible role in the oil markets. This calmed nerves that the oil producer would look to weaponise oil and underpin the idea that Saudi Arabia will increase production to cover the upcoming shortfall from Iran."
On the UK data front, the CBI industrial trends survey for October is at 1100 BST.
In corporate news, Whitbread grew sales 2.6% and underlying pre-tax profits 2.6% in the first half of its financial year as weaker consumer demand hit UK growth of its Premier Inn hotel chain.
The £3.9bn sale of its Costa Coffee arm was approved by shareholders earlier this month but directors said the "exact amount, timing and method" of the cash return to investors was yet to be determined.
International distribution and services group Bunzl said third quarter revenue increased by 7% at constant exchange rates due to organic growth of approximately 4% and an impact from acquisitions, net of disposals, of approximately 3%.
It added that it was buying Volk do Brasil, a distributor of personal protection equipment based in Parana, Brazil, for an undisclosed sum.
AstraZeneca and its global biologics research and development arm MedImmune announced a new multi-term agreement with Innate Pharma on Tuesday, building on an existing collaboration, and aimed at accelerating each company's oncology portfolio and bringing new medicines to patients more quickly.
The pharmaceuticals giant said the extended collaboration would enrich its immuno-oncology portfolio with pre-clinical and clinical potential new medicines. AstraZeneca said it would obtain full oncology rights to the “first-in-class” humanised anti-NKG2A antibody, ‘monalizumab’, as well as option rights to IPH5201, an antibody targeting CD39, and four preclinical molecules from Innate's pipeline.