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FTSE preview: Shares lower on GDP nerves

By Reuters
Updated: 02:41 EDT, 26 October 2010

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The FTSE 100 is seen opening down 9-14 points, or as much as 0.3% lower on Tuesday, according to financial bookmakers, tracking falls in Asia, with investors awaiting British third quarter GDP numbers.

Dealers monitor their screens on the trading floor of IG Index in London

Nerves: Traders will react to GDP news this morning.

Economists polled by Reuters are unanimous that Britain's quarterly rate of GDP growth will slow sharply from the second quarter's nine-year high of 1.2%, with forecasts ranging from a 0.8% rise in GDP to a 0.2% decline.

The median forecast for a fall in third-quarter GDP growth to 0.4% would take it below its trend rate of around 0.6%.

The UK blue chip index closed up 10.61 points, or 0.2% on Monday at 5,751.98, just below last Thursday's 6-month closing high, supported by strength in miners as metals and crude prices rose with a weaker dollar after G20 finance ministers agreed at the weekend to avoid competitive currency devaluations.

US stocks rose to a five-and-a-half month high on Monday as a falling dollar, partly driven by expectations of further quantitative easing by the Federal Reserve, prompted investors to buy riskier assets.

Asian stocks, however, slipped on Tuesday but stayed close to a 28-month high, while the dollar edged up against the euro as dealers took some profits with debate about the outcome of next week's Federal Reserve meeting clouding the near-term outlook.

Fed officials have not been uniform in their comments about 'QE2', leading to some doubts in markets about how big such a programme will be. Kansas City Fed President Thomas Hoenig even called more asset buys by the central bank a "very dangerous gamble".

The highlight of a batch of US economic pointers due on Tuesday will be October's consumer confidence index, with a reading of 49.2 expected, up from 48.5 in September.

Tech stocks could come under pressure after US chipmaker Texas Instruments warned that its fourth-quarter revenue will be hurt by slowing demand for computers and televisions, though its third-quarter results, released after the Wall Street closing bell, beat forecasts.

The flow of US third-quarter earnings continues on Tuesday, with figures from Ford likely to be the main feature ahead of the New York open.

Rumours persist that HSBC is lining up a $65 a share cash offer for Northern Trust, the Daily Mail market report said.

Las Vegas Sands Corp's Strip resorts, the Venetian and Palazzo, are joining the portfolio of InterContinental Hotels Group, under a 10-year licensing.

Aggreko said at the close on Monday that has won a $180m Bangladesh power plant contract.

There will be updates today from Arm Holdings, Afren, Braemar Seascope and Lidco Group.

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