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FTSE 100 preview: Shares wait on US GDP

By Reuters
Updated: 02:57 EDT, 28 January 2011

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The FTSE 100 index is seen edging lower on Friday, following weakness overnight in Asia, though with moves likely to be muted ahead of key US gross domestic product data.

A trader on the trading floor at IG Markets looks at his screen

Friday feeling: Shares may end the week lower.

The UK blue chip index looks set to shed 8 to 14 points, or as much as 0.2%, according to financial bookmakers, after it closed down 4.13 points, or 0.1%, at 5,965.08 on Thursday.

British consumer confidence tumbled to its lowest in almost two years in January, hit by rising inflation, a increase in value-added tax and a looming programme of public spending cuts, the monthly GfK NOP survey showed.

Asian stocks succumbed to a broad bout of profit-taking on Friday, as concern about rising inflation outweighed robust earnings.

The Nikkei average fell by more than 1%, weighed down by financial stocks, as investors worried about higher borrowing costs after Standard & Poor's cut Japan's credit rating.

Investors awaited advance US fourth-quarter GDP.

The US economy probably gathered speed in the fourth quarter, with the biggest gain in consumer spending in four years offering the clearest signal yet that a sustainable recovery is underway.

The economy grew at a solid 3.5% annual rate in the final three months of 2010, according to a Reuters survey, after expanding at a 2.6% pace in the third quarter.

'Some traders feel (the growth expectation) is a little over optimistic given the lingering unemployment rate and depressed housing market are still major issues for the US economy,' Jonathan Sudaria, a dealer at Capital Spreads, said.

'Earlier comments this week from the FOMC statement about the fragility of the US recovery have also caused traders to refrain about getting too bullish ahead of the figure,' he said.

Also, the January preliminary Reuters/University of Michigan consumer sentiment survey is due.

BP's deal with Russian state oil company Rosneft is facing a potential legal battle after the billionaire shareholders in the British group's Russian venture TNK-BP filed for an injunction, the Financial Times said.

Foster's said it is willing to speak to a prospective suitor, possibly leaving the door open for rival brewer SABMiller which has been widely rumoured to be interested in bidding, the Times said.

Talk of a possible bid by Amazon lifted online retailer ASOS on Thursday, the Daily Mail market report said, and while Danish shareholder Bestseller has ruled itself out of making a bid for the firm, it is interested in increasing its 18.3% stake, the newspaper said.

Shares in oil explorer Nautical Petroleum were firmer in Thursday on gossip of another North Sea oil strike, the Daily Mail market report said.

There will be results today from brewer Marston's.

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