FTSE preview: Libya, Japan fears return

By REUTERS
Updated: 02:50 EDT, 28 March 2011

The FTSE 100 is seen inching 6-9 points lower at open on Monday retreating after strong gains last week, with investors nervous about Japan's crippled nuclear plant and ongoing violence in the Arab world.

Blue Monday: Geopolitical fears have not abated.

Technical analysts said that further gains are unlikely in the short term after a strong show last week.

The blue chip index is seen falling as much as 0.15% after it closed 0.3% higher on Friday and posted a rise of 3.2% for the week, its strongest performance since November.

Japan's Nikkei 225 fell 1% as workers continued to battle to stem radiation leaks at the crippled Fukushima nuclear plant, and more dead were pulled from the rubble in the country's northeast, which was devastated by a massive quake and tsunami on March 11.

Also tempering appetite for risk were further Western air strikes in Libya and tension in Syria, Yemen and Bahrain. Investors were uneasy over energy supply from the oil-rich Middle East region.

Technical indicators also painted a rather gloomy outlook. 'The FTSE 100 continued its rally on Friday, but backed off from closing on its high into the close,' said James Hyerczyk, analyst at Autochartist.

'The high at 5,918.73 overshot the upper-level of a major forecast zone at 5,848.68 to 5,909.35, but the close was below this level indicating that perhaps this entire rally is merely a correction of the 6,105.77 to 5,591.59 break from February 21 to March 15.'

Retail investor optimism was holding up at least until February however. Retail investors were net buyers of UK equities for a third straight three-month period in December through February, Capita Registrars said.

Bank of England policymaker Adam Posen was quoted in the Guardian newspaper as saying that inflation would drop to 1.5% by mid-2012 as the government's austerity drive and a weak economy would lead to a decline in consumer spending.

Investors are betting global miner Rio Tinto will settle for a minority stake in Africa-focused Riversdale Mining after its A$3.9bn takeover bid failed to secure control of the firm just hours away from the offer deadline.

Royal Dutch Shell has shortlisted bidders for the four Nigerian onshore oil blocks it has put up for sale but financing challenges and negotiations with state-oil company NNPC could yet undo best laid plans.

Oil and gas explorer Tullow Oil will drill two test wells in northern Kenya starting in August, a top government official said on Saturday.

Procter & Gamble and Unilever will raise their prices on detergent and soap in China by up to 15% next month, the Shanghai Daily reported on Monday.

The insurer Legal & General is preparing for a push into lending money to Britain's commercial real estate market to help close the debt gap left by retreating banks.

The Association of British Insurers, one of Britain's most powerful investor groups, has summoned the bank to a meeting to warn the bank to amend its chief executive pay scheme or face shareholder revolt, the Daily Telegraph said.

Barclays Wealth, the private banking arm of Barclays PLC, announced 12 director-level appointments in Singapore and Hong Kong.

Royal Bank of Scotland's private banking arm wants to become less UK-focused, double in size and bring its international unit into the historic Coutts brand, the division's head told Reuters in an interview.

Daily Mail & General Trust, the owner of This is Money, update today while AG Barr releases its full-year results.