FTSE preview: Shares down, banks in focus

By Reuters
Updated: 02:56 EDT, 11 April 2011

The FTSE 100 is seen edging lower on Monday, giving back some of last week's gains in tandem with weakness in Japan and on Wall Street, as investors seek some fresh direction.

Watching brief: Traders will react to banking reforms.

Financial bookmakers expect the UK blue chip index to open down 3-5 points, or 0.1% on Monday, having gained 0.8% on Friday to end at 6,055.75, its highest closing level since mid-February as it notched up a third week of gains as rising metals prices and deal-making boosted miners.

US blue chips fell 0.2% on Friday as a spike in oil prices revived worries that inflation could derail the economic recovery, jolting a market that had been treading water ahead of upcoming corporate earnings.

The second-quarter earnings season begins unofficially after the US market's close on Monday when Dow component Alcoa reports results. JPMorgan Chase & Co and Google are due to report later in the week.

Asian stocks outside Japan edged higher on Monday, with Chinese and Australian shares leading the gains, as traders chose to focus instead on stronger-than-expected trade data from China.

China reported a small trade surplus of $140m in March, up from a deficit of $7.3bn in February, the General Administration of Customs reported on Sunday.

UK banks will be a focus on Monday, with the Independent Commission on Banking (ICB) set to outline several options to make sure retail depositers are protected if a bank hits trouble and to reduce the threat that taxpayers will be forced to again step in to save a big bank.

No major UK or US economic data is due on Monday, although new economic forecasts for the big economies are expected from the International Monetary Fund during the session, so investors will be focused on some key data later this week.

Domestic highlights include UK March inflation data on Tuesday, and UK February unemployment numbers on Wednesday. Across the Atlantic, the Federal Reserve's Beige Book on Wednesday, as well as US March CPI and industrial production figures on Friday, will be under the spotlight.

It is also an important week on the Chinese macroeconomic front, with first-quarter GDP data out on Friday alongside March inflation numbers.

BHP Billiton played down speculation it was in talks to acquire a cornerstone stake that could be worth $10.3bn in Australia's largest oil and gas firm, Woodside Petroleum, from Royal Dutch Shell.

BP will launch a final attempt this week to rescue a proposed alliance with Russian state oil group Rosneft and plans to seek approval by the Russian government to buy out its billionaire partners in TNK-BP.

Lloyds Banking Group is considering splitting into two in a move that would create a 'non-core' bank filled with assets ready for disposal, the Sunday Telegraph said.

Rupert Murdoch's planned takeover of pay-TV operator BSkyB should not be affected by his UK news arm admitting its role in a long-running phone hacking scandal, British politicians said on Sunday.

Premier Oil expects first gas production at its Gajah Baru field in Indonesia in six months after a brief delay, while oil output at Vietnam's Chim Sao field remains on track for July, a senior executive said on Monday.

888 Holdings said Sunday that its chief executive Gigi Levy is to step down from his role. British media reports had said that Levy was to step down after becoming frustrated with the slow progress of a potential takeover by British bookmaker Ladbrokes but the firm said this was not the case.

Michael Page International, E2V Technologies and Volex issue updates today, while Carrs Milling Industries posts first-half results.