London pre-open: Small drop expected on FTSE

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LONDON (ShareCast) - UK indices are expected to track their US counterparts lower this morning, taking its lead from Wall Street which took a breather after hitting new all-time highs earlier in the week.

City sources predict the FTSE 100 will open around six points below yesterday's close of 6,878.49.

US stock markets last night retreated from Tuesday's record highs, with weak domestic earnings reports and the threat of unstinting unrest in Eastern Europe taking the wind out of any further potential push higher.

Over night it was announced that economic growth in Japan picked up sharply in the first quarter, smashing economists' projections, driven by a consumer buying spree ahead of a sales-tax hike which began in April.

Gross domestic product (GDP) expanded at an annualised rate of 5.9% in the first three months of the year, up from just 0.3% growth in the fourth quarter of 2013.

Joshua Mahony, Research Analyst at Alpari, said that data "brings significant doubts as to whether the Bank of Japan will necessarily need to implement any second round of monetary stimulus, as has been widely expected".

"However, this figure has been somewhat distorted by the implementation of the sales tax in April and thus where we are seeing strength for the first quarter, it is likely that we will see subsequent weakness in the second quarter," he added.

Looking a little closer to home, a final report is today due out on Eurozone inflation, which is expected to confirm consumer prices rose to a 0.7% year-on-year rate in April, compared to 0.5% in the prior month.

Despite the increase, it would remain well below the European Central Bank's (ECB) 2% target, adding pressure on the monetary authority to change its policy.

The ECB is next month expected to introduce rate cuts and other new measures to address low inflation.

In this morning's company news, real estate investment trust Land Securities (LSE: LAND.L - news) said it is well positioned in a strong property market and underlined its confidence in future trading with an increased dividend payment. The UK's largest commercial property company said adjusted diluted net asset value (NAV) per share increased 12.2% to 1,013p for the year ended March 31st, while pre-tax profit jumped to £1.1bn from £533.0m previously.

London Stock Exchange (Other OTC: LDNXF - news) reported a 10% rise in annual revenues to £1.1bn with the acquisition of the LCH.Clearnet business. The company said it identified significant cost savings as part of the integration of LCH.Clearnet, which was purchased last May.

'Reassuring calm and stable' was the message set out by Aviva (Other OTC: AIVAF - news) Chief Executive Mark Wilson in the insurer's first-quarter trading update, with the value of new business (VNB) growing solidly despite weather and regulatory developments. VNB, Aviva's key measure of growth in life insurance, improved by 13% in the first three months of 2014 to £228m as a decline in UK Life was offset by strong performances across Europe and Asia. This was the company's sixth consecutive quarter of year-on-year VNB growth.

After UK and US regulatory reviews in the previous year, National Grid (LSE: NG.L - news) made a solid start under the new regime, with earnings climbing and an increased dividend. Adjusted operating profits rose 1% to £3.7bn and profit before tax by 2% to £2.6bn, with adjusted earnings per share up 5% to 54.0p.

NR

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