London pre-open: Strong performance in Asia to lift blue chips

11th Aug 2014 07:50

London's blue chips are heading for a positive start to the week following an upbeat performance by Asian stocks overnight.City sources predict the FTSE 100 will open around 40 points higher than Friday's close of 6,567.36.The gains have been driven by an in line consumer price index (CPI) from China and expectations for the region's consumer confidence readings, Bank of Japan's monthly economic survey, Chinese retail sales and an industrial production reading, all of which are due out either today or later this week. It will be a busy week for data across the globe, with the ongoing geopolitical tensions providing a turbulent backdrop to the numbers. Following a weekend of continued fighting in Gaza, Sunday night saw both Israel and Hamas agree to a 72-hour ceasefire proposed by Egyptian powers in a bid to prevent a prolonged war. Meanwhile, after Iraqi Prime Minister's televised criticisms of President Fuad Masum, the US government published a letter supporting Masum and called on the powers to form an inclusive government in order to unite against the IS militants. Here in the UK, all eyes will be on the Bank of England this week, with expectations high that it will give its strongest indication to-date that an increase in interest rates will be made by early 2015. According to The Times, economists are also predicting that Governor Mark Carney will not rule out the possibility of an increase before the end of this year. In other macro news, CPI figures will be released for the Eurozone, with economists looking to see if Mario Draghi's TLTRO plan has yet showed any signs of improving the reading. According to James Hughes, chief market analyst at Alpari, Draghi's work may be wasted if Russian powers continue to ban major foods from western Europe. "If farmers have to find new buyers for almost 10% of the products it could well be that this drives the inflation price lower as food price fall on a surplus of goods," he explained. "Now this may be down the line a little but is a very real danger should the tit for tat sanctions continue to be enforced."In this morning's company news, construction group Balfour Beatty has rebuffed another takeover proposal from rival Carillion over a row about Balfour's plan to sell its US Parsons Brinckerhoff subsidiary. Balfour said it had concluded that there were "a number of significant risks" of doing the deal, many of which it said could not be mitigated. Outsourcing group Mitie said it has had a "positive start" to the new financial year, with good organic revenue growth helped by new and expanded contracts. By the end of the first quarter ended 30 June, the company had secured 90% of its budgeted revenues for the whole financial year, slightly above the 89% secured at the same time in 2013.RPS has announced its plans to acquire planning and development services consultancy CgMs Holdings for up to £13m. The purchase includes CgMs's subsidiary, CgMs limited. Chief executive Alan Hearne said: "CgMs has an excellent reputation and track record. Its skills will complement the services RPS currently provides to the property development sector. Following a period of integration we anticipate CgMs will make a significant contribution to our BNE: Europe business in 2015 and beyond."NR