London shares outlook - lower after Wall St falls; eyes on HSBC AGM, Marstons H1

London shares outlook - lower after Wall St falls; eyes on HSBC AGM, Marstons H1

	Published : Fri, 25 May 2007 06:59 By : Agencies Print this Story

LONDON (Thomson Financial) - Leading shares are tipped to open lower after Wall Street fell back amid interest rate fears, with HSBC's AGM and interim numbers from Marston's taking centre-stage, while UK Q1 GDP will keep investors busy on the economic front, dealers said.

According to spread-bettors IG Index, the FTSE 100 index is seen opening around 21 points weaker, extending yesterday's losses when the Footsie closed down 51.0 points at 6,565.4.

In the US overnight, Wall Street retreated after housing data showed sales surged in April by the largest amount in 14 years and dampened hopes that an interest rate cut would be needed to stimulate the economy.

Investors were originally enthusiastic after the Commerce Department reported sales of single-family homes rose 16.2 pct last month after falling slightly in March. Although the report indicated that the economy continues to expand, investors became unnerved amid suggestions the Federal Reserve might be successfully steering the economy toward a soft landing and that a rate cut might not be needed.

The Dow Jones closed down 84.50 points at 13,441.10, while the Nasdaq Composite dropped 39.13 at 2,537.92 and the S&P 500 index lost 14.80 at 1,507.50.

Meanwhile, Asian markets were hit hard this morning amid the combined impact of a market bubble forming in China and receding hopes for an early reduction in interest rates in the US.

Tokyo's Nikkei 225 index ended the morning session 280.86 points lower at 17,416.11 and Hong Kong's Hang Seng was 300.58 behind at 20,498.39 by midday.

Still in Asia, oil prices were mixed in a market that is watching tight US gasoline supplies and further tension between Iran and the West.

Earlier this morning, the New York Mercantile Exchange's main oil futures contract, light sweet crude for delivery in July, had risen 0.20 usd to 64.38 a barrel from 64.18 usd in late trading in the US overnight. Brent North Sea crude for July was down 0.05 usd at 70.67 a barrel.

Turning to London, HSBC Holdings will host its annual general meeting today ahead of its interim results, due July 30.

On the reporting front, interim results from second-liner Marston's will be eyed for news on the looming smoking ban in England at its interim results on Friday, following the disposal of 279 low-end tenanted pubs at the beginning of the month.

While hoping for continued strong trends across the estate, investors will also be looking for some early positive signals from Wales where a smoking ban came into force on April and where Marston's has 200 pubs, out of its total remaining estate of around 2,200 pubs.

Regarding the numbers, KBC Peel Hunt forecasts pretax profit only 2 pct ahead at 40.9 mln stg and EPS up 4 pct at 9.4 pence, although the broker believes this is likely to be conservative.

Returning to scheduled corporate meeting, Aegis Group, Cookson Group and Great Portland Estates will all hold their annual shareholder meetings today, while smaller companies Antisoma and Independent News & Media will both host their EGMs.

Drugs developer Antisoma will ask investors for permission to issue up to a third more new shares to fund acquisitions at its extraordinary general meeting today.

After striking a substantial deal with Novartis over its lead cancer drug, the group is now on the lookout to broaden its pipeline by buying other companies or licensing its experimental cancer treatments to research. Antisoma is set to receive 100 mln usd from the Novartis deal over the next two years.

Sticking with smaller stocks, cardboard box manufacturer Smurfit Kappa Group is expected to benefit from higher corrugated prices when it reports its first quarterly figures since its flotation in Dublin in March.

Swiss broker UBS is forecasting a 35 pct quarter-on-quarter rise in pretax profits to 86 mln eur, up from 64 mln eur in the final quarter of 2006.

On the economic front, figures due to be released today are expected to confirm that the economy grew by 0.7 per cent in the first quarter of 2007 for a year-on-year rise of 2.8 per cent.

The first revision will include further details on the contributions from expenditure, investment and trade.

HSBC economist Karen Ward is forecasting slow consumer spending growth of 0.3 per cent on the quarter, with government spending up 0.6 per cent and investment growing at 1.5 per cent.

Meanwhile, the March index of services is expected to show the sector's output grew by 0.8 per cent in the three months to March, as it did in the three months to February, confirming the figure given in the preliminary estimate of first quarter GDP.

And in the US later today, existing home sales are seen falling to 6.11 mln units in April from March's 6.12 mln units. Jeoff Hall of Thomson's IFR Markets expects the sales rate to creep higher in the coming months, but average no better than 6.27 mln units until the fourth quarter.

tf.TFN-Europe_newsdesk@thomson.com

hco/jfr

The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.