London pre-open: Stocks seen lower ahead of retail sales

London stocks were set to fall at the open on Thursday following solid gains in the previous session, as investors eyed the latest UK retail sales figures.

The FTSE 100 was called to open 17 points lower at 7,440.

CMC Markets analyst Michael Hewson noted that US markets hit new records on Wednesday as investors shrugged off concerns about the coronavirus, even as the death toll continues to rise, and cases start to spread across Asia.

"The belief that central banks and governments can offset any economic downside from the virus with monetary and fiscal stimulus has continued to help drive asset prices higher, with Asia markets also rising this morning as China announced another reduction in its loan prime rate, in a move that wasn’t unexpected," he said.

"In a sign that caution was still very much at the forefront of investor thinking we also had the sight of a higher US dollar, which moved up towards a three year high, and gold prices hitting their highest levels since 2013, as some haven buying also took place.

"It is clear that while investors appear happy to continue buying stocks, they are hedging their exposure, and this is likely to continue as long as there is uncertainty as to how transitory the effects of any coronavirus ripple out effect is likely to be."

Overnight, minutes from the latest Federal Reserve meeting showed that policymakers saw the current monetary policy stance as likely to remain appropriate for a time, Rabobank said.

On the data front, UK retail sales for January are at 0930 GMT.

"We expect to see a decent rebound in January as some of the shackles come off and consumers become more confident about the outlook domestically, with expectations of a rise of 0.7%, to start 2020 on a positive note," Hewson said.

"A decent number here, along with some positive flash PMIs tomorrow will in all likelihood put to bed any speculation that the Bank of England will be cutting rates any time soon, particularly since the March 11th budget still looks set to take place as scheduled."

In corporate news, Lloyds Banking Group's underlying profit fell 7% last year as revenue declined amid challenging market conditions. Underlying profit for the year to the end of December declined to £7.5bn from £8.1bn as net income fell to £17.1bn from £17.8bn.

Pretax profit dropped by 26% to £4.4bn as the bank paid out £2.5bn for payment protection insurance - up from £750m a year earlier.

Strong precious metals and iron ore prices offset weakness in diamonds and coal as Anglo American reported a rise in full year profits.

Underlying core earnings rose 9% to $10bn, higher than analysts’ expectations while net debt increased to $4.6bn. A final dividend of 47 cents a share was declared for a total of $1.09 a share, up 9 cents year on year.

Capital expenditure increased to $3.8bn from $2.8bn a year earlier, the company said.