London shares outlook - lower on first day's trading in 2008; NY drop hampers

London shares outlook - lower on first day's trading in 2008; NY drop hampers

	Published : Wed, 02 Jan 2008 07:30 By : Agencies Print this Story

LONDON (Thomson Financial) - Leading shares look set to open lower on the first day's trading of the new year, with sharp falls on the Dow Monday leaving investors concerned that the volatility driven by the credit crunch in 2007 is set to continue in 2008.

Spread bettors IG Index expect the FTSE 100 index to open around 49 points lower at 6,408, having closed up 20.0 points at 6,456.9 on New Years Eve.

On Monday, Wall Street ended a painful year with another steep loss as investors glumly anticipated that 2008 would bring more of the uncertainty and turbulence of 2007.

The Dow fell 101.05 points, or 0.76 pct, to 13,264.82. The blue-chip index remains below its Oct. 9 record high of 14,164.53, at which point it was up more than 13 pct year-to-date.

The S&P 500 index fell 10.13, or 0.69 pct, to 1,468.36, to end 2007 with a gain of 3.53 pct. It had reached a record close of 1,565.15 on Oct. 9.

The Nasdaq fell 22.18, or 0.83 pct, to 2,652.28, to finish the year with a 9.81 pct gain. Despite the market's volatility, this was the best performance for the Nasdaq, still well below its tech boom highs, since 2003.

Today in Asia, the Nikkei 225 index was shut for a public holiday, while the Hang Seng ended its morning session down 240.43 points or 0.9 pct at 27,572.22.

Oil began the new year trading higher, above 96 dollars a barrel on Wednesday as geopolitical tensions weighed on the market ahead of a key US inventory report.

In early trade, New York's main contract, light sweet crude for February delivery, was at 96.34 dollars a barrel.

In macro news today, the manufacturing PMI is expected to ease lower in December to 53.8, after rebounding unexpectedly to 54.4 in November.

'We tend to the view that last month's PMI overstates the strength of the British manufacturing sector, despite evidence that export demand is holding up reasonably well,' said Philip Shaw, chief UK economist at Investec.

'Accordingly we are forecasting a decline,' he added.

Turning to UK equities, with no results due today investors will have little guidance but Retail & Financial stocks are sure to be in the spotlight once again, as investors speculate over the impact the credit crunch will have in 2008.

Bid rumours continued in the UK press this morning as the FT said talks between Banco Santander and Alliance & Leicester are not dead.

tf.TFN-Europe_newsdesk@thomson.com

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