London pre-open: Markets get boost from stimulus hopes in China and US

23rd Aug 2012 07:32

City sources predict the FTSE 100 will open up 31 points from yesterday's close of 5,774, regaining some of Wednesday's losses. Poor data from China may rekindle speculation that the government will opt to introduce further economic stimulus to enable it to meet its GDP target of 7.5 per cent. The minutes of the US Fed´s last rate setting meeting -released last night- seem to have hinted heavily at a possible third round of quantitative easing.China unveiled a fall in its PMI index which declined from 49.5 in July to 47.8 in August, marking the fastest contraction pace since November last year. Data also expected out today includes US jobless claims and new home sales for July in a report by the Commerce Department, which some analysts are saying will reveal a five month low. German chancellor Angela Merkel and her French counterpart will meet to try and iron out a common position on Greece and what measures can be adopted to keep the country afloat until a report slated for release next month from the Troika. At 9:30 the BBA will publish its UK lending data for the month of July, to be followed at 11:00 by the CBI´s distributive trades survey for August (consensus 16).Sales and underlying earnings came in slightly ahead of market expectations at drinks brands leviathan Diageo. Net sales in the year to June 30th rose 8%, or 6% on an organic basis, to £10,762m from £,9,936m the year before, beating market forecasts of £10,749m. Profit before tax climbed to £3,121m from £2,360m in the previous year, leading to earnings per share, excluding exceptional items of 94.2p, up from 83.6p the year before and ahead of the 92.01p the market was expecting. Cash costs in Kazakhmys's interim results came well ahead of the same period last year and above analysts' forecasts leading the miner to raise its guidance range for the full year. Net cash costs, a concern for analysts going into the results, jumped year-on-year from 93 cents a pound (c/lb) to 171c/lb in the six months to June 30th. Credit Suisse had estimated on Wednesday that cash costs would increase to 164c/lb.IMI, the global engineering group, came in on target in the first half but warned the second part of the year would be tougher due to the financial crisis in Europe. Revenue was up 6% to £1.09bn, with pre-tax profits rising 7% to £154.4m. Earnings per share were up 7% to 40.4p and the copany hiked its interim dividend 7% to 11.8p. But Chairman Roberto Quarta said the pace of revenue growth was likely to slow in the second half, given in particular the weakening economic conditions in Europe.