Wednesday March 26, 07:25 AM
London shares outlook - Weaker after DJIA falls; Asia mixed; miners in focus
LONDON (Thomson Financial) - Leading shares are expected to open weaker today, with sentiment undermined as the DJIA fell following downbeat economic data after big rallies in the prior two sessions, and with mixed cues from Asia.
Miners are likely to prove a drag on the FTSE 100 index as Brazil's Vale said late Tuesday it has ended talks to buy rival Xstrata (LSE: XTA.L - news) .
According to spread bettors IG Index, the FTSE 100 is set to open about 24 points lower at 5,664, having closed up 193.9 points yesterday.
In the US, the Dow Jones Industrial Average fell 16.04 points to 12,532.60, while the S&P 500 index rose 3.11 to 1,352.99, and the Nasdaq (NASDAQ: news) added 14.30 to 2,341.05.
A survey showing US consumer confidence slid to a five-year low in March while a measure of expectations for the future hit the weakest level in 35 years.
A separate report showed home prices slumped 10.7 pct from a year ago in major US cities as more air came out of the housing bubble.
In Asia, the Hang Seng (news) index ended its morning session up 156.42 points at 22,620.94, and the Nikkei 225 (news) index closed 38.59 points lower at 12,706.63.
Turning to commodity markets, oil prices were higher in Asian trade Wednesday ahead of the release of the US government's weekly energy stockpiles report.
In afternoon trade, New York's main contract, light sweet crude for delivery in May, rose 55 cents to 101.77 usd per barrel. The contract closed up 36 cents at 101.22 in floor trading Tuesday at the New York Mercantile Exchange.
London's Brent North Sea crude for May delivery climbed 32 cents to 100.92 dollars a barrel, after settling at 100.60 on Tuesday.
Turning to UK equities, on the M&A front, JC Flowers is working on a fresh approach to Friends Provident (LSE: FP.L - news) , the Financial Times newspaper reported without citing sources.
In other press reports this morning, Britain's financial institutions face greater scrutiny from the Financial Services Authority under proposals to be published today by the regulatory watchdog to correct weaknesses in its industry supervision exposed by its handling of Northern Rock (LSE: GB0001452795.L - news) , the Financial Times newspaper reported without citing sources.
Turning to scheduled news, Sainsbury (LSE: SBRY.L - news) is today expected to report a 3.5-4.0 pct increase in fourth-quarter like-for-like sales -- excluding petrol -- with the impact of tougher comparatives being offset by a continuing boost from food inflation.
French broker Exane BNP Paribas is forecasting underlying growth of 3.8 pct in the fourth quarter, but is concerned that intense competition may continue in the UK grocery market. However, the broker is not forecasting an all out price war, although it does expect market leader Tesco (LSE: TSCO.L - news) to reassert its pricing credentials.
Elsewhere, United Utilities (LSE: UU.L - news) is scheduled to publish a pre-close trading update for the full year to end-March.
Investors will be looking at the company's water and sewerage performance after industry watchdog Ofwat said that the company will increase its bills by 7.5 pct from April 1.
On the second tier, interim results are due today from Bellway (LSE: BWY.L - news) . The housebuilder is expected to report a fall in first half profits as the downturn in the residential housing market continues to hit sales of new homes.
Dresdner Kleinwort is forecasting a 9.2 pct drop in profits to 91.6 mln stg for the year to end-January 2007, while sales are expected to be almost 2 pct lower. Analysts will be particularly keen to see how reservations are building ahead of the key spring selling season.
Among small caps, there is a slew of companies scheduled to update the market with results. Interims are due from Bateman Litwin, and ScS Upholstery (LSE: SUY.L - news) , while final numbers are expected from: Asia Distribution Solutions (LSE: ADSL.L - news) , Concurrent Technologies, EG Solutions (LSE: EGS.L - news) , General Capital (LSE: GENC.L - news) , Lamprell (LSE: LAM.L - news) , Rugby Estates Investment Trust, LMS Capital, Mobile Streams (LSE: MOS.L - news) , Robotic Technology Systems, Soco International (LSE: SIA.L - news) , Tribal Group (LSE: TRB.L - news) .
Amiad Filtration Systems (LSE: AFS.L - news) is slated to publish final numbers today, Panmure Gordon predicts adjusted net income of 4.26 mln usd, up from 3.22 mln, for EPS of 10.9 pence. For 2008, the broker has raised its sales forecast to 61 mln usd from 57 mln.
When Nationwide Accident Repair Services releases its full-year figures today, Daniel Stewart expects pretax profits of about 6.81 mln stg for the year to end-December 2007, up from 5.91 mln last time.
GlobeOp Financial Services (LSE: GO.L - news) is due to release final numbers. Merrill Lynch (NYSE: MER - news) 's Philip Middleton forecasts year to December 2007 pretax profits of 6.9 mln usd, down from the previous year's 12.6 mln.
On the AGM front, Research Now (LSE: RNOW.L - news) is scheduled to hold a shareholder meeting.
Turning to economics, the Bank of England's King, Lomax, Bean, Sentance and Blanchflower are to appear before the Treasury Select Committee.
In the US, the durable goods data for February is expected to show an increase to 0.7 pct following a 5.3 pct decline the previous month. Durable goods -- excluding transportation -- are expected to have dipped 0.4 pct in the month following a 1.6 pct decline the previous month.
Today will also see the release of the latest new home sales figures which are expected to have declined to an annual rate of 575,000 in February, compared to 588,000 the previous month.
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