London pre-open: London to enjoy Berlusconi bounce

9th Nov 2011 07:44

London is set to enjoy a Berlusconi bounce, with City sources predicting the FTSE 100 will open up 50 points from yesterday's close of 5,567. "If Berlusconi resigns in the next few days, as seems likely, then there will likely be a short relief rally in stock markets and the 'Berlusconi political risk premium' embedded in Italian [bond] yields, which we calculate at 1%, will likely disappear," suggests Jan Randolph, head of sovereign risk analysis at IHS Global Insight, referring to the expected resignation of Silvio Berlusconi, the Italian Prime Minister.On the corporate front, car insurer Admiral said group turnover increased by 30% to £582m in the third quarter of 2011 from £446m the year before, but warned that full-year pre-tax profits will be towards the lower end of market estimates if there is no reversal of the current trend of a higher than normal level of large insurance claims.Bus and train firm FirstGroup said trading in the six months to the end of September has been in line with expectations, with profit before tax up 56.2% to £127.8m from £81.8m the year before, on revenue that grew just 3.2% to £3.17bn from £3.07bn.Talvivaara Mining saw net sales kick on in the third quarter, rising to €60.6m from €45.1m in the corresponding quarter of last year. However, the company fell into the red at the pre-tax level, losing €3.4m compared to a profit the year before €5.1m. --jh