London pre-open: Stocks seen higher ahead of FOMC, trade talks

London stocks were set to rise at the open on Wednesday as investors eyed the latest round of trade talks between the US and China and a policy announcement from the Federal Reserve, and mulled over the latest Brexit developments.

The FTSE 100 was called to open 27 points higher at 6,860.

Sterling was regaining some poise, having tanked overnight after an amendment that would have prevented a no-deal Brexit failed to pass through parliament.

London Capital Group analyst Jasper Lawler said: "The rejection of the Cooper amendment, which would have given Parliament the tools to delay Brexit, brought sterling tumbling back to earth. The pound has rallied over recent weeks, hitting an 11-week high versus the dollar on the hope that the UK will avoid a no deal Brexit.

"Whilst Parliament voted in favour of the Caroline Spelman amendment to block a no deal Brexit, the rejection of the Cooper amendment means that without a Brexit deal, the UK is still on course to crash out of the EU on March 29."

May will now head to back to Brussels to reopen talks with European leaders and seek alternatives to the Irish backstop. However, Donald Tusk, the EU's most senior official, has already insisted that there can be no renegotiation.

"Theresa May’s mission is looking rather futile," said Lawler.

Investors will be looking ahead to the start of two days of talks between US and Chinese delegates in Washington later in the day, while the latest policy announcement from the Fed, due after the European close, will also be eyed.

No rate hike is expected so attention will turn to Fed chair Jerome Powell’s press conference.

"The market is expecting a more cautious Fed with the possibility of a rate hike in the near term being ruled out. As the US data starts to feed through following the US government shutdown, it points to slower growth. Not the environment for further hikes," said Lawler.

On the data front, consumer credit, mortgage approvals and net lending figures are at 0930 GMT.

In corporate news, London Stock Exchange said it was buying a 4.92% stake in financial market infrastructure company Euroclear for €278.5m (£241.9m).

Euroclear provides settlement, custody and collateral management services across Europe with €28.2trln in assets under custody.

Wizz Air reported faster sales growth in the three months to end-December but the budget central and eastern Europe airline saw a continued squeeze on its margins.

With 8.1m passengers carried during the third quarter of the group's financial year, up 14.9% on the previous year, revenues climbed 21.2% to €512.7m. Guidance for full-year net profit was maintained for between €270m and €300m even though profit for the period sank almost 90% to €1.7m.

Infrastructure investor 3i Infrastructure updated the market on its third quarter, reporting that it continued to perform in line with expectations, and was delivering a “good” level of income.

The company said total portfolio income and non-income cash was £25.9m for the three months ended 31 December. It said it was on track to deliver its target dividend of 8.65p per share for the 2019 financial year, with the full-year dividend expected to be covered with a “significant” surplus.