London pre-open: FTSE set to rebound after huge Wall Street gains

London stocks are expected to jump higher on Tuesday morning after Wall Street posted its biggest one-day gain in two and a half years as trade tensions eased.

The FTSE 100 was being called 89 points higher after closing at 6,888.69 the previous day, when the index finished lower after a bout of late selling clipped the wings of what had been a mostly positive day.

US stocks had rallied hard on the back of reports of progress in behind the scenes talks between China and the US, with US Treasury Secretary Steven Mnuchin saying talks were ongoing between US and Chinese officials in a bid to stop a trade war. Mnuchin said he was “hopeful” of a truce between the two sides.

The US was also handing out so many exemptions on trade tariffs that markets were questioning whether President Trump ever had any intention of heading into a trade war with China, said Jasper Lawler at London Capital Group.

"Whatever the intention, the Chinese offering to buy more semiconductors from the US, to help cut its trade surplus, not only eased trade war fears boosting sentiment, but also gave an injection of life into downbeat technology stocks and financials," he said.

The Dow Jones Industrial Average finished up 2.84%, the S&P 500 added 2.72% thanks to technology stocks and financials, and the Nasdaq closed an impressive 3.3% higher. Microsoft a standout performer jumping 7.6%.

"European bourses are pointing to a strong start, taking the lead from a strong finish on Wall Street and a positive session in Asia. After a strong sell off last week and a negative start to this week, the FTSE could try to take back 7000. Financials are expected to move firmly higher and strong metal prices overnight could see the heavyweight miners perform well."

In other company news, GlaxoSmithKline said it had agreed to buy Novartis' 36.5% stake in their consumer healthcare joint venture for $13bn (£9.2bn). The JV was formed as part of the three-part transaction between GSK and Novartis in 2014.

Ferguson proposed to hike its interim dividend 10% to 57.4 cents per share and add a $4 per share special dividend and effect a share consolidation on top of ongoing share buybacks after selling its Nordic business. The FTSE 100 plumbing products group, formerly known as Wolseley, reported headline EPS up 16.6% to 202.1 cents on profits up 15% and revenues up 10.3% in the half year ended 31 January.

United Utilities said it was trading in line with management expectations for the year to the end of March. Underlying operating profit will be moderately higher than the year before after spending on infrastructure renewals rose slightly in the second half, the company said in a trading statement.

Of relevance for IG Group and CMC Markets, the European financial regulator confirmed the prohibition on marketing, distribution and sale to retail clients of CFDs, rolling spot forex, financial spread bets, binary options.