London pre-open: Modest rise expected in early trading

17th Jul 2012 07:39

City sources predict the FTSE 100 will open up 11 points from yesterday's close of 5,662, tracking Asian stocks higher after the International Monetary Fund raised its growth forecasts on Japan. The IMF now believes that the country's economy will expand 2.4 per cent this year rather than its previous predictions of 0.4 per cent. However, the good news was offset by the Fund's reduced global outlook from 4.1 per cent to 3.9 per cent. Acting as a backdrop, all eyes will be on Fed chairman Bernanke´s congressional testimony today and tomorrow. There is speculation that he may tweak his bias towards more quantitative easing. What is a fact in any case is that economists at Goldman Sachs have cut their forecasts for US gross domestic product in quarter to 1.0%. Similarly, PIMCO´s Bill Gross believes the US economy is approaching recession when measured on various of the most widely tracked parameters.UK CPI data to be released at 9:30. Plumbing and heating products distributor Wolseley has said that the difficult market conditions in Continental Europe in the third quarter have continued and it is now exploring strategic options for the future of its businesses in France. "Wolseley's strategy is to focus on businesses where it can establish leading positions in attractive markets and consistently generate good returns for shareholders. In this context, we have decided to explore strategic options for the future of our businesses in France," the firm said.Luxury fashion brand Burberry has served notice to fragrance company Interparfums, one of its worldwide licensees, of its intention to terminate their licence agreement at the end of this year. Upon termination Burberry would pay InterParfums around €181m in cash. The two parties have been in discussions about a possible new operating model for the Burberry fragrance and beauty business. A strong second-quarter for Rio Tinto saw the mining giant achieve record iron ore production in the first half, as well higher output in copper, bauxite, alumina, coking coal and titanium dioxide in the three-month period. First-half iron ore output of 120m tonnes (94m tonnes attributable) and shipments of 115m tonnes were both 4% higher than the first half of 2011. "Global economic conditions and sentiment dropped markedly in the second quarter. We are keeping a close eye on the pace of the US recovery, the continuing Eurozone crisis and the impact of efforts to stimulate the Chinese economy on the markets that we serve," the company said.