London pre-open: Outlook for Italian election leaves FTSE set to plunge

26th Feb 2013 07:29

City sources predict the FTSE 100 will open down 112 points from yesterday's close of 6,355, after the Eurozone's strategy for dealing with the region's debt crisis was threatened by indications that an anti-austerity party looks set to come out on top of the Italian elections. Adding to investor concerns, US equities plunged Monday as lawmakers came no closer to a deal to avoid automatic spending cuts due from Friday.President Barack Obama called on governors to push Congress to reach an agreement to prevent harsh across-the-board reductions, known as sequestration, in this fiscal year. He said the solution involved a "little bit of compromise".Programmes including defence, education and public health will be affected by the cuts should the government fail to find a way to cushion the blow before the end of the week. "These impacts will not be all felt on day one, but rest assured the uncertainty is already having an effect," Obama told the governors at the White House during their annual meeting.On today's agenda are US new home sales, the US house price index, and a US consumer confidence reading, while in the UK we can expect the CBI distributive trends survey, as well as speeches from both the Bank of England's Paul Fisher and Sir Mervyn King (the latter from Japan). In UK company news, engineering company GKN reported record annual profits Tuesday as sales grew across all four of its divisions. Revenues came to £6.9bn for 2012, up from £6.1bn the previous year, beating market expectations. The company posted a 19% year-on-year increase in profit before tax of £497m following a strong performance from operations across automotive and aerospace.Profit before tax rose 11.7 per cent to 181.1m pounds in the full year ending December 31st at Provident Financial. The company, which provides home credit in the UK and Ireland, also posted strong group performance and a dividend increase. Irish building materials group CRH said on Tuesday that its Chief Executive Officer (CEO) is to retire from the board at the end of the year, as it announced lower-than-expected sales for 2012. CEO Myles Lee has worked at CRH since 1982 and joined the board 10 years as an Executive Director. The company said that he intends to retire at the end of 2013 having reached the age of 60 and completed a five-year term as CEO.