London pre-open: Limited rise expected despite frightening data

3rd Aug 2012 07:34

City sources predict the FTSE 100 will open up just two points from yesterday's close of 5,662, flattening out ahead of today's all important July non-farm payrolls data. Equity markets across Europe tanked on Thursday afternoon in spite of a positive start, after the European Central Bank (ECB) dashed hopes of immediate action to stem the crisis. Speaking in an interview to Bloomberg PIMCO´s chief executive, Mohammed El-Erian, said that Draghi had good reasons to postpone action. The ECB chief wants to pressure governments into taking more steps on their own to resolve the crisis and may want to conserve the central bank's limited resources. Draghi, though, risks allowing the crisis to worsen by not acting now, El-Erian suggested.El-Erian also described the recent slowdown in purchasing managers´ indices in Asia and Europe as "frightening."Thus, all eyes turn now to the latest monthly employment report due out Stateside this afternoon, at 13:30.The HSBC Chinese composite purchasing manager´s index for July -released last night- suggests that the slowdown in the country´s economy has stabilized, the bank says. Also overnight, the NIESR released its most recent macroeconomic projections for the UK economy. It now forecasts economic output to contract at an 0.5% rate in the UK this year. The think-tank criticizes the government for not postponing its fiscal austerity.Prime Minister David Cameron has rebuffed suggestions that Chancellor George Osborne could be moved to a different role in government, saying that Mr Osborne would remain in the role up to the next election, due in 2015, according to the BBC.The Markit UK services sector purchasing managers´ index for the month of July is due out at 9:30. Consensus expects a reading of 51.5 after June´s 51.3. The BoE probably had access to this report before its meeting it is thought. What the bank terms 'clean up losses' from its non-core businesses and Ulster Bank continues to blight the performance of Royal Bank of Scotland (RBS), though impairments remain on a downward trend. RBS's operating profit in the first half of 2012 was £1,834m, down from £1,966m the year before, after a £125m provision for costs arising from the technology incident in June 2012 and a £50m provision for interest rate swap mis-selling. Operating profit for the core business - the bits RBS wants to focus on in the future - was £3,185m, down from £3,927m in the first half of last year. Iberia and British Airways owner International Consolidated Airlines Group, otherwise known as IAG, swung to a loss in the six months to June 30th after fuel costs increased by a quarter and losses at its Spanish airline widened. The company reported a half-year pre-tax loss of €390m, down from a profit of €39m the year before, as fuel costs gained 25% from €2,378m to €2,973m.Glencore, the commodities marketer and producer, is to sell Viterra's minority interest in a nitrogen facility located in Medicine Hat, Alberta, Canada. The group announced on Friday that it had entered into an agreement to sell the Medicine Hat Facilitiy Interest to CF Industries Holdings for an undisclosed sum. Unsurprisingly, the sale is conditional upon Glencore's completion of the acquisition of Viterra and receipt of regulatory approvals.