FTSE 100 preview: US nerves knock shares

By REUTERS
Updated: 03:03 EDT, 6 May 2011

The FTSE 100 is seen opening lower on Friday, with investors nervously awaiting non-farm payrolls data from the United States after a sharp sell-off in the previous two sessions.

Friday feeling: The Footsie is headed to end the week below 6,000.

The blue-chip index is seen falling as much as 0.2%, according to financial bookmakers, after it slid 1.1% to 5,919.98 points in the previous session, bringing its losses to 2.5% for the week so far.

A sharp sell-off in commodities has led to big falls in miners and energy stocks, but metal prices and crude prices have stabilised as investors look to see if the US employment data may revive a sense that the global economy is recovering fast.

The median consensus view for non-farm payrolls is that 186,000 jobs will have been created in April, but analysts said that investors were positioning themselves for a lower number, so if it matches expectations there could be a bounce in equities.

In the UK, investors will watch producer price data for April released for further evidence on when the Bank of England's Monetary Policy Committee might next raise interest rates. A rate rise is not fully priced in until February.

PPI output is forecast at 5.1% for the year and 0.7% for the month, down from 5.4% and 0.4% respectively.

Investors will also watch the political fallout from local elections and a referendum to change the voting system which junior coalition party the Liberal Democrats who advocated a new system, are expected to lose.

Any signs that this may destabilise the government would make some investors worry that the austerity measures implemented could be put at risk, which they think could hurt Britain's fiscal position.

Royal Bank of Scotland's first-quarter results will come under the cloud of an insurance mis-selling debacle as it may have to follow its rival Lloyds in announcing a hefty provision over the mis-selling of payment protection insurance (PPI).

Royal Dutch Shell agreed to sell its stake in an Nigerian OML 42 oil block to a consortium including Nest Oil Group, sources close to transaction told Reuters.

Separately, a court in Nigeria's oil-producing Niger Delta on Thursday dismissed an appeal by Royal Dutch Shell in a land rights dispute with community elders over its Bonny oil export terminal.

GlaxoSmithKline has no immediate plans to spin off an HIV drug company created in 2009 with Pfizer, though it is 'open-minded' about the unit's long-term position, GSK's chief executive said on Thursday.

Rolls Royce releases trading data. Separately, Rolls Royce, alongside General Electric, asked the Pentagon on Thursday to let them resume development, at their own expense, of a controversial alternate engine for the multinational F-35 fighter jet.

Retail bellwether John Lewis said weekly department store sales dropped 9.2% for the week to April 30th compared to a year earlier.

There will be updates today from IMI, Admiral Group, Cobham, Easyjet, Forth Ports, Lancashire Holdings, Millennium & Copthorne Hotels, Psion, RS Group, Rentokil and Scottish Mortgage Investment Trust.