London pre-open: Sell-off likely to continue as oil falls, Chinese data disappoints

The UK stock market is set for another sell-off on Friday after a weak finish in Wall Street and yet more disappointing economic data from China.

City sources predict the FTSE 100 will open around 56 points lower than yesterday's close of 6,461.70.

This index finished at its lowest level since 4 November after four straight days of losses wiped 4% off its value.

“European indices are expected to open deep in the red on Friday, as a negative end to the US session overnight feeds through into Asian and European markets as we head into weekend,” said analyst Craig Erlam from Alpari UK.

US markets had started on the front foot on Thursday after a surprise acceleration in retail sales growth in November and an unexpected fall, albeit small, in weekly jobless claims.

However, ongoing downwards pressure on oil prices - West Texas Intermediate dropped below the $60-per-barrel mark - began to weigh heavily on energy stocks by the end of the session, prompting the Dow and S&P 500 to pull back sharply from their intraday highs.

“The decline in oil prices is showing no signs of slowing which would suggest that $50 a barrell is quite likely and soon,” Erlam said.

A raft of economic data was released in China overnight, and while retail sales and fixed asset investment figures were largely in line with forecast, industrial production growth slowed more than expected from 7.7% to 7.2%.

“Efforts to clean-up Beijing’s air ahead of the APEC summit, which disrupted factory activity in parts of northern China last month, probably contributed to the weakness,” said economist Julian Evans-Pritchard from Capital Economics.

Looking ahead to Friday’s session, European industrial production figures are due out later in the morning and should show that output increased by just 0.2% over October after a 0.6% rise in September.

In the afternoon, the US producer price index is expected to show that core prices excluding food and energy increased by 0.1% in November after a 0.4% gain the month before. The initial estimate of the closely-watched University of Michigan index measuring US consumer confidence is forecast to rise further to 89.7 in December from 88.8. in November, despite already running at a seven-year high.

Housebuilder Bellway is looking forward to “another significant increase in profitability” this year after a solid start with reservations rising on last year. The company said that trading has returned to a “more normal seasonal pattern”, with a slowdown in the summer being followed by a pick-up in the sales rate throughout autumn. Total reservations taken in the 18 weeks between 1 August and 30 November average 147 per week, up from 144 year-on-year.

Defence and security group BAE Systems has completed the acquisition of commercial cyber service provider Perimeter Internetworking, which trades as SilverSky, for £144.4m. Separately, the group has also entered an agreement with Esterline Corporation for the acquisition of Eclipse Electronic Systems for approximately £17.8m.

Brewing and beverage group SABMiller, soft drink giant The Coca-Cola Company and Gutsche Family Investments have named Hüseyin M. Akin as chief executive officer of Coca-Cola Beverages Africa. Akin will step into his new role from 1 March, the company said.