London pre-open: Stocks seen higher ahead of services data

London stocks were set to edge up at the open on Thursday as investors eyed the latest reading on the UK services sector, with US stimulus and Covid-19 vaccine hopes expected to continue underpinning sentiment.

The FTSE 100 was called to open 12 points higher at 5,952.

CMC Markets analyst David Madden said: "European and US stocks posted decent gains yesterday. Sentiment was lifted because of hopes of a US stimulus package being agreed upon, even though no major progress has been made on that front. Nancy Pelosi, of the Democrats, said there are still ‘serious differences’ between what both sides are requesting. It would appear that traders welcomed the talk between Pelosi and Steven Mnuchin, US Treasury Secretary, even though they didn’t amount to anything - a conversation is at least a step in the right direction.

"Continued optimism in relation to pharma companies developing a potential Covid-19 vaccine was also a factor in the rally witnessed on both sides of the Atlantic. US stocks drove higher as the S&P 500 and the Nasdaq 100 posted record closes again."

Markit’s services PMI for August is due at 0930 BST.

In corporate news, Melrose Industries said it planned big job cuts at its GKN Aerospace business as the industrial turnaround company reported a first-half loss of £560m.

The FTSE 100 company's pre-tax loss for the six months to the end of June widened from £131m a year earlier as revenue dropped to £4.1bn from £5.6bn. Adjusted operating profit dropped to £56m from £541m.

Melrose said GKN's sales were expected to fall by up to 30% in 2020 and that it would make a "significant reduction" to the division's global workforce in the second half.

Sanofi and GSK said they had started a Phase 1/2 clinical trial for Covid-19 vaccine involving 440 people in the US.

The companies said they anticipated first results in early December to support the initiation of a Phase 3 trial in the same month. If data are sufficient for a license application, the duo said they planned to request regulatory approval in the first half of 2021.

The vaccine candidate, developed in partnership by Sanofi and GSK, uses the same technology as one of Sanofi's seasonal influenza vaccines with GSK's established pandemic adjuvant technology.

There are currently more than 160 vaccines in development globally, including trials being conducted by Moderna, AstraZeneca, and a collaboration between Pfizer and BioNTech.