FTSE 100 preview: Shares shrug off Dubai fears

By Reuters
Updated: 03:01 EDT, 1 December 2009

The FTSE 100 is expected to open strongly on Tuesday, following gains on Wall Street and in Asia as concerns over Dubai's debt issues eased.

Happy day: Traders are expecting a recovery in prices.

Financial bookmakers expected the UK blue chip index to gain as much as 0.7%, having shed 1.1% on Monday.

The blue-chip index rallied 1% higher on Friday having dropped 3.2% in the previous session, its biggest one-day percentage fall in eight months, after Dubai sought a debt standstill for state-owned Dubai World.

Dubai World on Tuesday unveiled plans to restructure about $26bn in debt out of the estimated $59bn it owes, reassuring investors that the emirate's debt problems can be contained.

On the UK economics front, investors will be eyeing the monthly CIPS Manufacturing PMI.

Analysts forecast a slight increase in business confidence in the sector, with the headline figure seen shifting to 54.0 in November from 53.7 the previous month.

Ahead of that, the Nationwide house price index is due. Consensus forecasts are for a further rise in November of 0.3%, compared to October's increase of 0.4%, representing a slight deceleration in the pace of price rises.

The annual rate of increase is expected to reach 2.4% in November, against 2.0% in October.

Later in the day, investors' attention will be drawn across the Atlantic, with US ISM Manufacturing data for November and Pending Home Sales data for October due.

Chairmen or even all directors of British listed companies would be re-elected annually under proposals published on Tuesday to make corporate leaders more accountable and learn from the credit crunch.

The three owners of De Beers – 45% owned by Anglo American - have agreed in principle to inject up to $1bn in the company through a share placing, the Financial Times said, citing people close to the company.

US food group Kraft is close to finalising a formal offer for the British confectioner, said the Times.

Kraft has until Monday next week to submit an offer document, but it is thought that a formal £9.8bn bid could be submitted to Cadbury shareholders on Friday, said the newspaper.

Extract Resources has spoken to several parties, including Rio Tinto, about developing its Rossing South deposit, the world's largest undeveloped uranium resource, but has not ruled out going it alone.

A leak from a pipeline near Alaska's giant Prudhoe Bay oil field had only a minor impact on North Slope oil production, an effect that was rapidly being erased, according to BP, the operator of the field, on Monday. Diageo plans to eventually brew its Guinness beer in South Africa now that its new joint venture brewery near Johannesburg has started up, but local production is still some years off.

British Airways will compensate consumers for cancellation penalties and other expenses stemming from an erroneous $40 fare offer between the United States and India, the US government said on Monday.

Publisher Pearson thinks book retailers are through the worst of the downturn, despite Borders UK's slide into administration last week, and believes US namesake Borders Group is on the up.

Pearson will continue to invest 8% of sales from its education business in new products through next year, which it expects to be a very tough year for US school textbooks.

There will be up[dates today from TUI Travel, Greene King, Shaftesbury and ITE Group.