London pre-open: Stocks seen flat after China data; BoE leaves rates at record low

London stocks looked set for a flat start on Thursday after the Bank of England stood pat on rates, as expected, and as investors mulled a mixed batch of data out of China.

The FTSE 100 was called to open steady at 5854.

CMC Markets analyst Michael Hewson said: "Asia markets have struggled for direction with a mixed session and this lack of direction is expected to translate into a slightly firmer open here in Europe after yesterday’s losses.

"This morning’s latest China trade numbers for April showed little evidence of a recovery in economic activity despite the lifting of lockdown back at the beginning of March. Exports were better than expected rising 3.5%, probably helped by the shipping of medical products like PPE as the rest of the world wrestled with the virus while in various states of lockdown.

"In worrying signs that internal demand remains weak imports slid much more than expected, falling sharply, by 14.2%, suggesting that while the economy was reopening activity was far from normal, with consumers behaving more cautiously."

On home turf, Bank of England policymakers voted unanimously to keep the main interest rate on hold at a record low of 0.1% and 7-2 to leave the £645bn bond-buying programme unchanged. Two members voted to increase the target for the stock of asset purchases by an additional £100bn.

The BoE said: "The timeliest indicators of UK demand have generally stabilised at very low levels in recent weeks, after unprecedented falls during late March and early April."

Berenberg analyst Kallum Pickering said: "While we expect the BoE to announce more asset purchases in the coming months, today was too early for that.

"As a major part of the stimulus which the BoE has already announced is still in the pipeline, the BoE can afford to wait, especially as key risks remain under control.

"While the decision was in line with the market’s and our expectation, the vote split on asset purchases provides a signal that more stimulus is likely."

In corporate news, British Airways owner IAG swung to a first-quarter operating loss of €535m as it warned of a "significantly worse" second quarter due to the coronavirus pandemic that has grounded most of its fleets.

The result compares with a profits of €135m a year ago. Total operating losses including exceptional items relating to fuel and foreign currency hedges came to €1.8bn. The company added that it would defer the delivery of 68 aircraft as it forecast passenger demand not recovering before 2023.