FTSE preview: Markets fall on Japan woe

By Reuters
Updated: 04:05 EDT, 14 March 2011

The FTSE 100 is expected to fall on Monday with attention focused on Japan following Friday's huge earthquake and tsunami.

Counting the cost: The disaster in Japan will wiegh on sares today.

The UK blue chip index looks set to drop 5-14 points, or as much as 0.2%, according to financial bookmakers, after it closed down 16.62 points, or 0.3%, at 5,828.67 on Friday.

The index fell 2.7% on the week, its biggest such fall since July.

'With the main trend down, expectations are that rallies will be sold. The lingering question is how far will the market retrace to the upside before fresh selling pressure arrives to drive the market lower,' James Hyerczyk, an analyst at Autochartist, said.

'If traders are respecting the recent break from 6,043.12 to 5,796.44 then look for a possible rally to 5,919.78. A breakout above this area will indicate strength which could drive the index to 5,951.11 to 5,987.61.'

Japan's benchmark Nikkei average shed 6.2% on Monday as the country battled to prevent a nuclear catastrophe after the quake and tsunami that likely killed more than 10,000 people.

Last week's earthquake in Japan could lead to insured losses of nearly $35bn, risk modelling company AIR Worldwide said, making it one of the most expensive catastrophes in history -- even without expected additional tsunami losses that are not yet counted.

It is a relatively quiet week in terms of domestic economic data, with UK labour market numbers on Wednesday the main focus of attention.

On the other side of the Atlantic, with no important data due on Monday, investors were looking ahead to releases later in the week that include the Federal Reserve's federal funds rate decision on Tuesday, and US consumer prices and industrial output data on Thursday.

Rio Tinto inched closer to gaining control of coal producer Riversdale Mining after a $3.9bn sweetened bid rallied more shareholders to accept the offer but Riversdale's top shareholders Tata Steel and CSN still hold the key.

Anglo-Russian oil venture TNK-BP failed again at the weekend to settle a dispute over an alliance between partner BP and Rosneft, sparking new recriminations between its shareholders.

Tullett Prebon held merger talks with Compagnie Financiere Tradition SA, but the talks stalled over price, Bloomberg reported on Friday.

BAE Systems has signed an agreement with French defence company Dassault to build a self-piloting drone which would be used by both countries' air forces, the Daily Telegraph said.

An alliance of media groups opposed to News Corp's proposed buyout of satellite broadcaster BSkyB have criticised proposals by the UK government to ease competition concerns about the deal.

Diageo has got through the second round of a £500m auction for Stock, central Europe's biggest drinks firm, the Daily Mail said.

RBS is expected to reveal that more than 300 of its bankers are each paid an average of £1m, risking a City pay row, the Guardian said.

JJB Sports said it expects to raise around £65m through a proposed equity capital raising to help it avoid going into administration.

There will be results today from Tristel, TEG Group and Brady.