FTSE preview: Shares to fall on profit-taking

 

The FTSE 100 is expected to suffer sharp falls this morning with lower commodity prices and waning risk appetite seen denting demand for equities.

A dealer monitors her screens on the trading floor of IG Index in London

Market watcher: Shares may give up recent gains.

The blue-chip index was seen falling as much as 0.9% by financial bookmakers, following weakness on Wall Street and in Asia and after it rose 0.2% on Tuesday to close at 6,082.88 points.

The index gained 2.7% in April, and was just short of a near-three year high on Tuesday, but investors seem to feel that the rally has run out of steam and that equities are set for a retreat.

'Traders are concerned that the recent multi-year highs made by the major indices were a little ahead of the economic fundamentals and profit taking is expected to add to the declines,' Jonathan Sudaria, night dealer at London Capital Group said.

Energy firms were among the biggest drags on US stocks, weighed by the slipping crude price which was hit by industry data showing US crude oil stocks rose sharply last week.

Miners were also seen under pressure as weaker base metal prices, a 14% plunge in silver prices and a lower-than-forecast manufacturing growth reading in China were set to reduce demand for the sector.

Investors were awaiting British construction PMI data for April due for more clues on the state of the economy ahead of a rate decision from the Bank of England's Monetary Policy Committee on Thursday. The reading was forecast at 55.5, down from 56.4 in March.

Mortgage lending data and money supply figures for March released at the same time will also be watched, as will Nationwide house price data for April.

Antofagasta, Barclays. G4S, GlaxoSmithKline, Kingfisher, and Weir Group are all going ex-dividend, and set to take 5.53 points off the index.

An Australian federal court upheld an earlier ruling barring Fortescue Metals Group from gaining access to a key rail haul line operated by rival Rio Tinto, Fortescue said on Wednesday.

Standard Chartered said it recorded double-digit income growth in the first quarter, helped by strong economic growth in its core Asian markets.

Glencore International AG, set to list later this month, has set the price range for its London and Hong Kong IPO slightly lower than previous guidance, enabling it to raise up to $10bn, three sources told Reuters on Wednesday.

BP has agreed to pay a $25m civil penalty, as well as spend $60m on enhanced safety measures, to settle a federal probe of a pipeline oil spill on Alaska's North Slope in 2006, the US government said on Tuesday.

There will be updates today from Next, Kazakhmys, Antofagasta, Legal & General, BBA Aviation, Blacks Leisure, Henderson, JD Wetherspoon, Logica, Moneysupermarket, Numis, Provident Financial, Rightmove and Sage Group.