FTSE preview: Shares fall on Saudi fear

By Reuters
Updated: 03:04 EDT, 7 March 2011

The FTSE 100 is expected to start the week lower after weakness in Asia as oil prices gained further with ongoing turmoil across the Arab World, prompting further concern about the economic outlook.

Monday: Shares cannot shake Middle east fears.

Bookmakers saw the FTSE 100 falling as much as 0.4% after it eased 0.2% to close at 5,990.39 on Friday.

US crude continued its sharp ascent to hit a two-and-a-half high on Monday as civil war brewed in Libya.

Top oil exporter Saudi Arabia, home to most of OPEC's spare capacity was also watched as clerics forbade protests at the weekend.

This added to anxiety that the sharp rise in the price of oil could snuff out a fragile recovery in the global economy and dented appetite for riskier assets like equities. The MSCI ex-Japan index fell over 1%.

British manufacturing activity slowed at the start of 2011 after record performances in the previous three quarters, but firms are optimistic about the future despite having to raise their prices, a survey said.

On a relatively quiet day for other economic data, the euro zone Sentix investor morale index for March and US employment trends data for February will be watched.

Imbalances in the banking system are growing again and could lead to a repeat of the financial crisis, Bank of England Governor Mervyn King said in an interview published in Saturday's Daily Telegraph.

Banks countered that they had made their businesses safer.

HSBC, Europe's biggest bank, may move its headquarters from London to Hong Kong because of what it sees as high levels of tax and red tape in the UK, according to a report in the Sunday Telegraph.

The Liberal Democrats backbench Treasury Committee has backed a radical plan to distribute the government-owned shares in Lloyds and RBS to the public, The Guardian said on Monday.

A US government probe of BP's Atlantis production platform in the Gulf of Mexico found no evidence of significant safety breaches, the Interior Department said on Friday.

Separately, Russian Prime Minister Vladimir Putin said on Friday BP did not inform him about possible risks concerning BP's Russian venture TNK-BP opposition to the British major deal with Rosneft.

Rupert Murdoch's News Corp should pay £11bn to buy out satellite broadcaster BSkyB, said a top five investor, according to a report in the Sunday Times.

BAE Systems is preparing for the imposition of strict curbs on its business by the United States as it moves closer to resolving a year-long review by the State Department, the Financial Times said.

BG Group said on Monday it had finalised a 20-year liquefied natural gas supply deal with Tokyo Gas for 1.2 million tonnes per annum of LNG beginning in 2015.

Ties to Xstrata may exclude Deutsche Bank and JPMorgan from the $300-$400 million in fees that a listing of Xstrata's part-owner Glencore could yield.

The London Stock Exchange is eyeing a takeover of its US rival Nasdaq just weeks after announcing a merger with the Toronto stock exchange, the Sunday Times reported.

There will be results today from Petrofak, Chaucer, Inmarsat, Intertek Group, Stagecoach, Michael Page International and SDL.