London pre-open: Stocks seen higher on EU recovery fund hopes

London stocks were set to rise at the open on Thursday as investors welcomed news of an EU virus recovery fund, although growing tensions between the US and China continued to weigh on investors’ minds.

The FTSE 100 was called to open 46 points higher at 6,190.

CMC Markets analyst Michael Hewson said: "In Europe, optimism also abounded, helped by an EU Commission proposal that include the raising of €500bn of debt on bond markets, which would be handed out as grants to the worst affected European countries hit by the virus pandemic, with other measures set to include a suite of new taxes and levies on tech companies, and on single use plastics, over the course of the next few years.

"While markets have reacted as if this is a significant moment for Europe, the sums involved are tiny in the overall scheme of things, given the scale of the economic shock, particularly since none of the money will be available immediately. There is also the prospect that the stated sums will probably get watered down, and even if it is delivered will probably be so small as to be completely insignificant."

Meanwhile, Sino-US relations were set to remain in focus after the South China Morning Post suggested China was ready to hit back at the US over any punitive action with regard to Hong Kong.

In corporate news, easyJet plans to cut about 4,500 jobs, or 30% of its workforce, as the airline prepares to restart flying with a smaller fleet and reduced demand as a result of the Covid-19 crisis.

The company said it expected to fly about 30% of capacity in its fiscal fourth quarter compared with 2019. Its fleet size at the end of the 2021 year will be about 302 aircraft – 51 planes lower than expected. EasyJet said demand for air travel was unlikely to reach 2019 levels until 2023.

Booking trends on resumed flights are encouraging, the company said. Demand for summer is increasing from a low base and winter bookings are well ahead of a year earlier, including customers rebooking cancelled flights.

Bus operator Stagecoach said it expected full year adjusted earnings per share of between 12.5p - 14p as it reported an increase in available liquidity to deal with the coronavirus impact.

The company said available liquidity of £814m was £308m higher than reported on April 3 after it issued £300m of commercial paper under the Bank of England's Covid-19 corporate financing facility.

Cineworld said that its lenders have agreed to waive the leverage covenant on its credit facility for the June testing date, and increased its leverage covenant to 9.0x net debt-to-EBITDA for the December testing date.

The company said it also agreed the terms of $110m (£89.73m) of additional liquidity through an increase in its revolving credit facility.

It said it had secured credit committee approval to apply for an additional $45m through the Coronavirus Large Business Interruption Loan Scheme in the UK, and was expecting to shortly begin the process to access $25m through the US government CARES Act.