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London shares outlook - lower after mixed NY; Rio Tinto, Prudential in spotlight
AFX
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LONDON (Thomson Financial) - Leading shares are tipped to open lower, following on from a lacklustre session in New York and sharp falls in Asian markets, with quarterly production figures from Rio Tinto and new business figures from Prudential providing the focal point, dealers said.
According to spread-bettors IG Index, the FTSE 100 index is seen opening around 30 points behind after closing 48.4 points weaker at 6,449.4 yesterday.
In the US overnight, Wall Street was mixed in lacklustre trading though investors pushed the Dow Jones industrials to a new trading high and past 12,800 for the first time. However, stocks showed little overall movement as investors were hesitant about buying into the broader market following disappointing earnings from technology leaders including Yahoo.
The Dow Jones closed 30.84 points higher at a record high of 12,803.84, while the S&P 500 index managed to gain just 1.00 at 1,472.50 and the Nasdaq Composite slipped 6.45 lower at 2,510.50.
Meanwhile, in Asia this morning, stocks were hard hit by profit-takers, with China-related stocks leading the fall on fears that the mainland's A-share markets may be in for a big correction after hitting new highs repeatedly in recent sessions, traders said, adding that speculation regarding another interest rate hike in China also weighed on sentiment.
The Hang Seng Index ended the morning down 404.71 points at 20,372.38, while Tokyo's Nikkei was 254.92 lower at 17,412.41 by midday.
Oil prices were mixed in Asian trade after a fall in US gasoline inventories was overshadowed by news that US refineries had picked up production.
Earlier this morning New York's main oil futures contract, light sweet crude for delivery in May, was down 19 cents at 62.94 usd a barrel from 63.13 usd in US trading overnight.
Brent North Sea crude for June climbed six cents to 66.10 usd.
Turning to London, mining stocks will look to Rio Tinto for direction after the iron ore major reported iron ore output in the three months to March rose 12 pct, while hard coking coal output was up 28 pct. Copper output, however, slipped 3 pct during the quarter, although refined copper production grew by 19 pct.
Analysts were expecting the first-quarter figures to show the effect of adverse weather conditions after Rio Tinto was forced to shut down its Cape Lambert and Dampier ports, used to export iron ore, for a couple of days while a cyclone passed the western Australian coast.
Still to come, insurer Prudential is expected to report a 4 pct decline in first quarter sales today, held back by weaker performances at its UK and US divisions.
Analysts are expecting sales of 613 mln stg for the three months to March 31, down from 637 mln stg in the same period last year.
UBS said recently the anticipated decline partly reflects the loss of a distribution deal with Lloyds TSB Group, at a cost of around 15 mln stg.
The market will also be looking for a progress report on the insurer's recently-announced plans to revitalise its underperforming UK operation by cutting costs and pulling out of less lucrative areas of the market.
Elsewhere among the blue-chips, housebuilder Persimmon will host its annual general meeting for shareholders today.
On the second tier, mid-cap WH Smith, the newspapers, books and stationery retailer, is expected to reveal a 2 pct increase in underlying profit for the six months to end-February 2007, with analysts forecasting the 672-store group to make a profit before tax and exceptional items of about 57 mln stg, up from 55 mln stg in the prior year.
The outturn reflects chief executive Kate Swann's strategy of focusing on cost-cutting and improving gross margins by shifting the mix of products, rather than driving top line sales.
Among smaller stocks, interim figures are due from AIM-listed Offshore Hydrocarbon Mapping and finals from LiDCO Group, while small-caps BioProgress and Climate Exchange will also report full-year numbers.
Returning to corporate meetings, London Capital Group Holdings, Ocean Wilsons and Spring Group will hold their AGMs today, while Tribal Group hosts an EGM.
The group last month announced it has conditionally agreed to sell Mercury Health Holdings to Care UK, the proceeds of which -- 52 mln stg net cash -- will be used to pay down debt.
On the economic front, there is data little of interest due for release in the UK today, but across the Atlantic, investors will be eyeing a measure of US unemployment as well as the April reading of the Philadelphia Fed survey.
The market is looking for US first-time jobless claims to have fallen to 315,000 last week from the previous week's 342,000. The April Philadelphia Fed Survey monthly index, meanwhile, is expected to rise to 2.0 from 0.2 in March.
tf.TFN-Europe_newsdesk@thomson.com
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