FTSE 100 preview: Shares flat, news on RBS

By This Is Money
Updated: 03:12 EDT, 21 September 2009

The FTSE 100 index is seen opening flat on Monday as a drift lower by Asian markets offsets modest gains from Wall Street on Friday.

Market watcher: Shares will struggle for dirdction this morning.

The UK blue-chip index closed 8.94 points firmer on Friday at 5,172.89, another 12-month closing high, having also reached a new 2009 intraday peak of 5,183.88.

Overall, the UK blue-chip index gained over 3% last week fuelled by hopes that the global recession could be over after hints made by US central bank boss Ben Bernanke.

The FTSE 100 has gained around 21.5% so far this quarter and is on track to post its best percentage quarterly gains since the index was launched in 1984, but it is still down 4.5% from a year ago, just before the collapse of Lehman Brothers.

The financial crisis has helped to rebalance the global economy but more structural changes are needed to prevent imbalances from returning once the recovery is underway, the Bank of England said on Monday.

In a paper in its Quarterly Bulletin, the central bank noted that global imbalances had contributed to the financial crisis and the resulting recession as large capital flows had contributed to a misallocation of funds and mispricing of risk.

Meanwhile, asking prices for homes in England and Wales are on average 1.5% lower this month than a year ago, with the available stock at its lowest for 18 months, property website Rightmove said on Monday.

The average asking price rose 0.6% in September to £223,996, after a 2.2% fall in August, as the lack of supply put upward pressure on the market. No other UK economic pointers are due for release on Monday, and there is nothing much scheduled all week on the domestic front, aside from the interest rate and quantitative easing vote outcome from this month's Bank of England Monetary Policy Committee meeting, due on Wednesday.

Investors' main macro focus this week will be on the two-day Federal Reserve Open Market Committe meeting, which kicks off on Tuesday, with a decision on interest rates due after the London close on Wednesday.

Ahead of that meeting, August US lead indicators will be released this afternoon, with a 0.8% rise forecast, after a 0.6% gain in July.

US President Barack Obama said on Sunday he would push world leaders this week for a reshaping of the global economy in response to the deepest financial crisis in decades, at the two-day summit of leaders from the Group of 20 countries which begins in Pittsburgh on Thursday.

Royal Bank of Scotland is talking to investors to gauge support for a 'modest' equity placement of £3bn to £4bn, a source familiar with the situation said on Sunday, with the share issue to be used to replace a small portion of the government's economic interest in the bank.

BHP Billiton plans to use part of a cash surplus of around $18bn to fund a round of acquisitions, possibly involving some large rivals, The Wall Street Journal reported.

Xstrata's proposed 'merger of equals' bid for Anglo American will reach a crucial stage in the coming weeks as analysts say the company is increasingly likely to walk away from the deal, while Anglo could force the matter by approaching the Takeover Panel, the Independent said on Monday.

The chief executive of Randgold, Mark Bristow says gold's recent rise through $1,000 an ounce is due to fundamentals such as dwindling mine supply, and not gold purchases by Barrick Gold to cover hedge positions.

Rolls-Royce is trying to fend off the loss of a major £31bn engines deal due to US defence spending cuts, the Daily Mail reported on Monday. The aerospace giant has been lobbying in Washington to prevent funding for its F-136 engine for the F-35 Joint Strike Fighter project being axed, the newspaper said.

Vittorio Colao, chief executive of Vodafone, plans to revamp the group's marketing and image for the first time in four years, the Daily Telegraph said on Monday.

Morrison's is to overhaul its non-food offering in spring 2010 in an attempt to attract more foodies, with sources saying that the supermarket chain is planning to ditch up to ten of its home products categories and replace them with more kitchenware and cooking utensils, The Independent said on Monday.

Luxury goods market is still challenging, but British fashion label Burberry is cautiously optimistic it will start to turn, its chief executive, Angela Ahrendts told Reuters on Friday.

The chief executive of chip designer Arm Holdings, Warren East has said the semiconductor industry responded to the current recession quicker than it had during previous downturns, the Financial Times said on Monday.

It is understood that Blacks Leisure is considering shutting Sandcity, its division which sells and distributes its O'Neill boardwear franchise, The Times said on Monday.

The former chairman of National Express, David Ross has said the group could have survived as an independent company if it had better managed its relationship with the Department for Transport, the Financial Times said on Monday.

Dragon Oil is to ask the Irish Takeover Panel to issue an ultimatum to the oil explorer's largest shareholder, Emirates National Oil Company (Enoc), to make a bid for the company or walk away, the Sunday Times said.

Sir Nigel Rudd is out of the running to succeed David Turner as chairman of the aerospace group, according to a source, the Sunday Telegraph said.

Peter Fincham, ITV's director of television, has emerged as a potential candidate for chief executive of the independent broadcaster as the dispute over Tony Ball's pay demand escalates, the Times reported on Monday.

Whitbread, Rentokil Initial, and Segro join the FTSE 100 from Monday, replacing Pennon, Balfour Beatty, and Foreign & Colonial Investment Trust.

Alliance Trust will post first half results.