London pre-open: Steep rise expected on euro hopes

7th Dec 2011 07:21

London's blue chip index is expected to open firmly in positive territory on Wednesday morning on reports that European leaders are in talks to propose an enlarged 'financial bazooka' at this weekend's summit. City sources predict the FTSE 100 will open up 57 points from yesterday's close of 5,569.Apparently, negotiators want the European Financial Stability Facility (EFSF), worth €440bn, to operate with another fund worth €500bn which is to become operational in mid-2012. This second fund, called the European Stability Mechanism, has the objective to accelerate payments to any country which comes under market pressure. However, likely to weigh on sentiment today will be reports that China saw the annual rate of export growth slow down in November, according to the Commerce Ministry.  In company news, packaging and office products group DS Smith has reported that revenues from continuing operations grew 26% to £1,034.5m in the first half ended 31 October, helped by a full six-month contribution from French firm Otor which it acquired in September 2010 (the first half of last year only included a two-month contribution). Excluding the impact of acquisitions and currency, revenue still grew by 11% due to growing volumes. Adjusted operating profit from continuing operations rose 41% to £78.3m. KESA Electricals has revealed that it made an adjusted pre-tax loss of €13.6m in the first half ended 31 October, compared with a profit of €25m the year before, due to a "significant revenue reduction at Comet that was not fully off-set by gross margin improvements and cost savings". The firm also blamed a "weakening French market and a "deteriorating" market in Italy. Revenue fell 7.6% to €2,567.5m.Transport group Stagecoach said that pre-tax profits in the first half fell from £108.7m to £88.7m, reflecting a loss from its East Midlands Trains franchise, as expected. However, the group said that this segment is expected to return to profitability in the second half. Group revenue increased from £1,133.6m to £1,293.7m.