London pre-open: Stocks seen higher on positive US and Asian cues; services data eyed

London stocks were set for a firmer open on Thursday, taking their cue from positive sessions in the US and Asia and following upbeat Chinese services data.

The FTSE 100 was expected to open 18 points higher at 7,689.

Data released earlier showed China's services sector grew at its fastest pace in more than three years in December. The Caixin/Markit services purchasing managers' index rose to 53.9 last month from 51.9 in November, marking the best reading since August 2014 and beating expectations of 51.8.

Meanwhile, the headline Caixin China Composite PMI came in at 53.0 from 51.6 the month before.

In the UK, investors will be eyeing the release of net lending, consumer credit, mortgage approvals and Markit's services PMI. In the US, the ADP employment report - widely considered a pre-cursor to the non-farm payrolls report - is out at 1315 GMT, while initial jobless claims are at 1330 GMT and Markit's services PMI is at 1445 GMT.

Investors will also be digesting minutes from the Federal Reserve's December meeting released late on Wednesday, which showed officials were divided over the prospect of three rate hikes this year. They also discussed the possibility that Trump's tax changes could cause inflation pressures to rise.

CMC Markets analyst David Madden said: "The minutes from the Federal Reserve meeting last month pointed out the US central bank foresees higher economic growth on the back of the tax cuts, but the central bankers are divided over how much of an economic boost it will bring about. The Fed hiked interest rates three time last year, and some traders feel that will be repeated this year, while others feel there could even be a fourth hike. The outlook of the Fed could undergo a substantial change, as there is going to be a change up in terms of members."

In corporate news, Debenhams has issued the first profit warning of 2018 after sales and "tactical promotional action" misfired in the crucial festive period.

UK like-for-like sales fell 2.6% in the 17 weeks to 30 December and after cutting prices for many weeks in order to try and compete, gross margins for the six-month period are expected to be down around 1.5 percentage points on the prior year.

Whitbread has appointed former ITV and Royal Mail boss Adam Crozier as its new chairman, just as City chatter swirls about a potential break-up of the Premier Inn and Costa Coffee owner.

Current chairman Richard Baker will retire from the board at the end of February, with Crozier promoted from his role as senior independent director.

Medical inhaler group Vectura said 2017 full year revenue should be in line with expectations, adding that a strong second half delivered closing cash and cash equivalents of around £104m net of £1.4m outflows in respect of the £15m share buyback which started in November.

It added that it was now going to focus on “relatively lower risk, high value development opportunities with known molecules” across its whole non-partnered pipeline after delays in the approval of the group's US generic Advair programme alongside positive pipeline developments prompted an investment review.