FTSE PREVIEW: Market expected to fall following Friday’s rally

| October 8, 2012 | 0 Comments

By
This Is Money Reporters

02:01 EST, 8 October 2012


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10:13 EST, 8 October 2012

16.00: The Footsie continues to claw back earlier heavy losses; it has pegged them back to a 24 point deficit on the day – from a 50 point drop first thing – standing at 5,846.

Wall Street’s Dow Jones was down 0.4 per cent earlier on, but has recovered slightly to stand 28 points (0.2 per cent) at 13,582.

Alastair McCaig, market analyst at IG, commented: ‘The U.S. public holiday Columbus Day has done nothing to help the poor volumes that have traded in Europe, and as expected half an hour after opening the Dow was down 41 points.

‘It is five years since Angela Merkel last visited Greece, but tomorrow’s trip is being firmly described as a state visit like any other, and not an inspection by the Troika.

Brokers: World Bank cut its growth forecasts for the East Asia and Pacific region, saying China slowdown could get worse

Brokers: World Bank cut its growth forecasts for the East Asia and Pacific region, saying China slowdown could get worse

‘Persuading the local Greek
population to believe that will be easier said than done, with a general
perception that Germany are forcing the Greek government to implement
its austerity measures.’

14.00:

The Footsie has regained a smidgen of ground, now standing 37 points down on the day at 5,834.

And after Cookson shares fell 80.5p
to 534.5p, Morgan Crucible, which also makes ceramics products for
industrial use, fell 8 per cent, down 23.05p to 256.45p.

FirstGroup shares continued to suffer
in the wake of the Department of Transport’s decision to pull the award
of the West Coast franchise.

The removal prompted Deutsche Bank to
reduce its full-year forecasts for this and next by 5 per cent and 16
per cent respectively, adding that it would maintain its sell
recommendation.

Shares fell another 3 per cent, off 6.1p to 190p, compared with 244p prior to the shock announcement last week.

09.05:

European markets took their lead from a downbeat session in Asia as investors continued to fret over global economic prospects.

Sentiment was driven by the World
Bank’s downward revision of growth forecasts for Asia, while there were
also falling commodity prices and a mixed finish on Wall Street on
Friday despite positive employment news.

The
FTSE 100 index stood 43.7 points lower at 5,827.1, while the Dax and
Cac in Germany and France respectively were down by more than 1 per
cent.

There were only
two risers in the top flight, while copper miner Evraz topped the
fallers board with a decline of 9.35p to 244.75p.

Corporate updates did little to
lighten the mood after profit warnings from materials business Cookson,
whose shares slid 14 per cent, and recruitment firm Michael Page
International.

Cookson warned that profits will be
materially below hopes due to difficult conditions in its engineered
ceramics division. Shares fell 84.25p to 530.75p.

And the poor economic conditions left
their mark on Michael Page after it said full-year operating profits
were likely to be slightly below current market forecasts of just under
£68million.

It also reported third quarter
profits of £126.5million, down 8 per cent on the previous three months.
Shares fell 14.15p to 350.8p, a drop of 4 per cent.

08.45:

The Footsie has fallen 50 points on opening. More soon.

08.00:

The FTSE 100 index is set to open 29 to 32 points lower, or around 0.6 per cent, having rallied late on Friday.

London’s blue chip index closed up
43.24 points, or 0.7 per cent, at 5,871.02 last week after better than
expected employment figures in the United States spurred buying of
commodity and banking stocks.

London
copper fell more than 1 per cent, giving up last week’s gains as
worries about the global economy resurfaced, ahead of data from top
consumer China later this week for clues on demand.

Underlining the uncertain outlook, the
World Bank cut its growth forecasts for the East Asia and Pacific
region and said there was a risk the slowdown in China could get worse
and last longer than expected.

European diplomats discussing the
possibility of a separate budget to improve monetary union in the
eurozone are considering a sum of around €20billion, according to the
Financial Times Deutschland.

There is no major economic data out in the UK and the U.S. today.

Stocks to watch

BAE SYSTEMS: Britain will block the
proposed $45billion merger between EADS and BAE Systems if key “red
line” priorities are not met, defence minister Philip Hammond said on
Sunday, three days before a deadline for detailing the deal.

MICHAEL PAGE INTERNATIONAL: Has a third-quarter trading update.

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