FTSE 100 preview: Shares down; Oil lower

By Reuters
Updated: 02:55 EDT, 24 August 2010

The FTSE 100 is expected to fall this morning ahead of US home sales data, after Wall Street fell overnight and Asian stocks slipped as worries over the economic recovery overshadowed Monday's initial euphoria of merger and acquisition news.

Taking stock: Shares are seen falling today.

The UK blue chip index looks set to fall 16 to 28 points, or as much as 0.5%, according to financial bookmakers, after it closed 39.56 points higher, or 0.8% at 5,234.84 on Monday, helped by a spate of corporate takeover activity, though trading was thin.

US stocks slipped in one of the lightest volume sessions of the year on Monday as investors took refuge in defensive shares after the latest corporate M&A failed to soothe concerns the recovery is stalling.

Asian stocks fell on Tuesday, with Japan's Nikkei index dipping below a key support level as investors fretted about an anaemic global recovery, while the euro hit a six-week low against the dollar.

Investors will closely watch US Existing Home Sales for July. Economists in a Reuters survey forecast a 4.7m annualized unit total versus 5.37m annualized units in June.

Other economic data to be eyed include the US Richmond Federal Manufacturing survey for August.

Commodity stocks may be a focus as crude prices fell after inventories remained at high levels.

A Canadian newspaper said on Tuesday that global miner Rio Tinto is weighing a bid with a Chinese partner for Potash Corp as the world's biggest fertiliser company fends off a $39bn hostile bid from BHP Billiton. Rio Tinto declined to comment.

BHP Billiton may intimidate potential rivals to its $39bn bid for Potash Corp with what is set to be a strong second-half result powered by fat cash flows this week.

The world's biggest miner will be able to brandish its firepower for Potash's bid on Wednesday when it is expected to report a 50% jump in June-half profit to $6.9bn on a big rebound in iron ore, copper and coal prices.

State-run Korea National Oil Corp chief executive said it will not consider raising its $2.6bn hostile takeover offer for British oil explorer Dana Petroleum in return for management backing.

Coal and base metals miner Xstrata pushed deeper into the iron ore sector on Tuesday with a $381m agreed takeover of Australian-listed Sphere Minerals, which hold magnetite iron ore deposits in Mauritania.

A legal showdown between Lehman Brothers and Barclays resumed on Monday with a Barclays executive testifying in court that a Barclays pact to buy parts of bankrupt Lehman was the best deal possible given the near collapse of financial markets in 2008.

BP aims to retrieve a failed blowout preventer atop its ruptured Macondo well in the Gulf of Mexico on Thursday, the top US official overseeing the oil spill response said on late Monday.

There will be results today from Antofagasta, Cairn Energy, Gem Diamonds, Persimmon, Promethean World, Spirax-Sarco Engineering, Spectris, John Wood and WPP.