London pre-open: FTSE drops on mounting 'fiscal cliff' fears

13th Nov 2012 07:28

City sources predict the FTSE 100 will open down 24 points from yesterday's close of 5,767, as sentiment remains rather depressed as investors become increasingly concerned over the US's chances of side-stepping the much talked about 'fiscal cliff', a mix of tax hikes and pay reductions totalling $800bn dollars which is due to come into play in the New Year. Nevertheless, the Financial Times comments today that some influential Republicans are increasingly advocating a change of tack in the current policy debate. They argue that closing existing tax "loop-holes" could raise the necessary funding. Also playing on investors' minds is the situation in Greece. Although it was finally confirmed that Eurozone finance ministers would grant Greece a two-year extension to get its fiscal house in order, they stopped short of giving the go-ahead on the 31.5bn bailout tranche. Eurogroup Chairman Jean-Claude Juncker boldly stated that Athens's deadline to bring debt down to 120% of gross domestic product by 2020 would be extended to 2022. But International Monetary Fund (IMF) Managing Director Christine Lagarde openly showed her disapproval and said that the two organisations obviously had "different views" on the timetable that the Hellenic Republic needs to complete. UK economic announcements due out today include the Consumer Price Index, the Producer Price Index, and the Retail Price Index, all of which are expected at 09:30.Looking abroad, the US Treasury Budget Statement and the ABC Consumer Confidence reading are both due out later today. In company news, net advertising revenue (NAR) at ITV fell in the third quarter, but not as much as the rest of the market, the broadcaster said. The company took a hit from the Olympics and Paralympics, which were shown on the BBC. NAR for the 'ITV Family' was down 10% in July, down 9% in August and down 1% in September. This left the firm with an overall third quarter drop of 6%, which it said was in line with expectations and ahead of its competitors. Outsourcing giant Capita is confident it will deliver three per cent organic growth for the year and an improved cash conversion rate for 2012 as compared to 2011. In terms of sales performance, 2012 has been a record year for major contract wins, with 33 contract wins set to bring in £1.7bn; at the same stage last year the group had won 16 major contracts in 2011 worth £1.3bn.Building materials giant CRH has scaled back its earnings forecast this year on the back of ongoing weakness in Europe and Hurricane Sandy disrupting its operations in eastern America. After a flat like-for-like (LFL) sales performance in the first half, with an 8% increase in the Americas being offset by a 5% decline in Europe, CRH experienced "much lower growth in our Americans operations and a higher rate of decline in Europe" in the third quarter. As such, group LFL sales declined by 3% and were down a total 1% for the first nine months of they year.