London pre-open: FTSE to track US markets lower

4th Oct 2013 07:35

City sources predict the FTSE 100 will open around 20 points lower than yesterday's close of 6,449.04, tracking US markets which finished around one per cent lower on Thursday as the government shutdown entered its third day. Markets are hoping that Congress will agree to raise the $16.7tn debt limit by the October 17th deadline to prevent the US government defaulting on its obligations, something that the Treasury Department said could have a "catastrophic effect" on all aspects of the US economy. It said in a report yesterday that a default could lead to "events of the magnitude of late 2008 or worse"."Not only might the economic consequences of default be profound, those consequences, including high interest rates, reduced investment, higher debt payments, and slow economic growth, could last for more than a generation," the Treasury said.Asian markets also declined overnight. It looks set to be a quiet day on the macro economic news front, as the US has cancelled the release of non-farm payrolls data until the government shutdown ends. In UK company news so far today, Serco, the FTSE 250 international service company, has completed the sale of its UK occupational health business, a move which forms part of the group's strategy to take a more proactive management of its portfolio. The sale was made for a consideration of £3.5m. The group said it remains "committed to serving and developing our core health operations such as community healthcare, non-clinical support services and BPO services", whilst also transferring capabilities to new regions "where we see the greatest opportunities as part of our strategy to build a balanced portfolio in markets and geographies around the world". Sweeteners and food ingredients group Tate & Lyle said that operating profits in the second quarter were in line with expectations but slightly below last year due to softness in the US beverage sector. The company said this was as a result of the cold spring and slow start to the summer which has affected sweetener volumes in both divisions. Nevertheless, Tate maintained its guidance for "another year of profitable growth" this year.Engineering group WS Atkins has bought project management business Confluence Project Management for £8.4m. Through the acquisition of Confluence, which has operations in Asia Pacific, the Middle East and India, Atkins hopes to grow its business in emerging markets.NR