London pre-open: FTSE to track US stocks lower

1st Mar 2013 07:36

City sources predict the FTSE 100 will open down 20 points from yesterday's close of 6,361, tracking losses seen in the US in late trading last night. The decline came after it became clear the automatic budget cuts of $85bn were likely to come into play on Friday after neither a Republican nor a Democratic bill to replace the cuts received enough support to be put through to a test vote. However, losses were limited by a generally strong set of data out from the US earlier in the day. The weekly jobless claims in the week ending February 23rd declined to 344,000 compared to the previous week's reading of 366,000 (revised from 362,000). The consensus estimate was for a reading of 360,000 claims. In UK economic news today's agenda includes consumer credit, PMI manufacturing, M4 money supply, M4 sterling, and mortgage approvals. Looking abroad, today's announcements include the EU unemployment rate, German PMI manufacturing, US non-farm payrolls and US construction spending. In UK company news, the multi-billion dollar merger of mining giants Glencore and Xstrata is now not expected to be completed before the current deadline, the companies revealed on Friday. The long-stop date for the 'Glenstrata' tie-up, valued at $33bn, has already been pushed back two times as the firms await the approval of regulators in some of its markets, as well as the completion of an Xstrata court process as part of the transaction.UK banking group Lloyds saw underlying profits soar in 2012 but was forced to take further provisions for Payment Protection Insurance (PPI) redress in the fourth quarter. Underlying profit increased from £638m to £2.61bn last year, as costs reduced by 5.0% to £10.1bn. This cost reduction was in line with the strategic review target two years ahead of plan, and the company expects these to fall further to £9.8bn this year.Kenmare Resources, the titanium feedstock miner, has entered into an agreement with Absa Bank establishing a corporate facility of $40m. This follows an announcement at the end of January when the company said it had concluded an agreement with its lending banks providing the flexibility to raise additional debt. Absa Bank, a member of Barclays, is an existing lender to the Kenmare Group.