FTSE 100 preview: Shares dip on EU fear

By Reuters
Updated: 02:55 EDT, 9 May 2011

The FTSE 100 is seen opening lower on Monday, as initial optimism after the US non-farm payrolls faded, and as worries resurfaced on Europe's sovereign debt crisis.

Market watcher: Shares are expected to fall.

The blue-chip index is seen falling as much as 0.6% after it rose 1% on Friday to close at 5,976.77, bolstered by the better than forecast employment data.

Germany's economy minister rejected on Sunday speculation that Greece should abandon the euro zone and return to the drachma, arguing that this would only weaken Europe at a time when it needs to be strengthened.

Analysts said the talk threw the focus back on the shaky finances of some euro zone countries and the currency block's future.

A positive reaction to US non-farm payrolls on Friday could also give way to fears that the recovery in employment will not be enough to ensure strong growth in the world's largest economy.

Investors will watch UK house price data from Halifax for more clues about the future of the UK economy. House prices are seen falling 2.9% on the year to April.

HSBC is expected to kick off a pivotal week for Europe's biggest bank, issuing first quarter earnings, by saying losses from bad loans continued to fall in the United States, two days before its new boss unveils a radical shake-up.

Barclays is set to abandon the legal fight over the mis-selling of personal protection insurance (PPI), The Sunday Telegraph reported.

BHP Billiton sees the global economy remaining fragile in the near term and economic growth possibly slowing in the medium term, its chairman said on Monday.

It also warned on Monday that an over-reaction to Japan's nuclear crisis would be bad for clean energy solutions globally. Separately, it said it was not planning a bid for US aluminium company Alcoa.

BP continued restarting units at its 475,000 barrel per day Texas City, Texas, refinery over the weekend, according to notices filed with Texas pollution regulators.

Lafarge and Anglo American plan to sell £600m worth of assets to pay down debt and avoid anticompetitive action, the Financial Times said on Monday, citing people familiar with the talks.

Legal & General Investment Management, the fourth-largest investor in National Express, will not join a push for a boardroom shake-up at the British transport firm led by its largest shareholder.

There will be updates today from Centrica, Inmarsat, Lonmin, Thomas Cook, Hiscox, Telecity and Travis Perkins.