London pre-open: Cautious start expected for the Footsie

11th Dec 2012 07:32

City sources are predicting a subdued start for the FTSE 100 at the open with markets still sensitive to political uncertainty in the Eurozone and US.The Footsie is expected to open down around five points from yesterday's close of 5,922. Markets yesterday initially started the day on the back foot after the surprise early resignation of Italian Prime Minister Mario Monti, which sparked a surge in Italian bond yields. However, optimism regarding 'fiscal cliff' talks Stateside between President Barack Obama and House Speaker John Boehner boosted buying in afternoon trade, helping London's benchmark index finish with moderate gains."European equities are trading little changed this morning, taking a breather after yesterday's impressive intra-day recovery after having successfully fended off resurfacing worries about political instability," said Markus Huber, the head of German HNW trading at ETX Capital. Little significant economic data is scheduled for release today, except for the German ZEW economic sentiment index which is expected to improve from -15.7 to -11.5 in December, according to consensus estimates.However, as market analyst Michael Hewson from CMC Markets explains, this forecast could be "a little on the optimistic side given last week's growth downgrades from the ECB as well as the Bundesbank".In other news, loan growth in China came in weaker than expected at 522.9bn yuan in November, missing the 550bn yuan estimate. Stocks to watchHSBC has reached an agreement with United States authorities in relation to investigations regarding inadequate compliance with anti-money laundering and sanctions laws. Under these agreements, HSBC will make payments totalling $1.921bn, continue to cooperate fully with regulatory and law enforcement authorities, and take further action to strengthen its compliance policies and procedures. As expected Whitbread, which owns the Costa and Premier Inn chains, reported a slight slowdown in group like-for-like (LFL) sales in the third quarter but said that it was still on track to meet full-year expectations.Total LFL sales were up 3.3% year-on-year, down from the 4.3% growth seen in the first half. However, the group had warned in interim results that it would likely see a "moderation" of LFL growth in the second half post-Olympics, with the London hotel market "settling" and consumer markets remaining "broadly flat".Diageo, the FTSE 100 drinks group which owns brands such as Johnnie Walker, Smirnoff and Guinness, has announced that it has called off talks to buy tequila giant Jose Cuervo after being unable to 'agree a transaction'.The London-listed beverage firm already distributes Jose Cuervo in North America and Europe but has said that it will now terminate the current distribution agreement at the end of June 2013.