London pre-open: Stocks seen lower as investors eye Fed rate announcement this week

London stocks were set to edge lower at the open on Monday as investors look ahead to the latest policy announcement from the Federal Reserve this week.

The FTSE 100 was called to open down 17 points at 7,147.

CMC Markets analyst Michael Hewson said: "While investors remain concerned about tensions between the US and the rest of the world over trade, it’s also set to be an important week for the US and UK economies, with the US central bank set to pull the trigger on another rate increase this week at a time when some early concerns about rising inflation have subsided to a certain extent.

"It’s not really in doubt whether we’ll get a 0.25% rate rise this week, however some of the recent data out of the US speaks to some divergence across the economy. A robust jobs markets speaks to a labour market which has a little more slack than originally envisaged. Recent consumer data on the other hand has pointed to weak spending patterns amongst US consumers.

"This is a worry at a time when you would expect consumer spending to be much stronger. This could affect how Fed policymaker’s view the economy and it will be impossible to ignore the current uncertain backdrop with respect to US trade and politics, and whether it will dominate Fed thinking at this week’s press conference. How new Fed chief Jerome Powell comes across at his first press conference is likely to be an interesting dynamic in contrast to Janet Yellen’s style."

The Fed announcement is due on Wednesday. Before that, market participants will eye the G-20 meeting in Argentina later on Monday.

In corporate news, Micro Focus chief executive Chris Hsu has resigned as the company downgraded its profits guidance less than six months after completing the huge acquisition of HP's software arm.

The rate of revenue decline "has been greater than anticipated" due to several factors, management said, paring guidance to revenue in a range from -6% to -9%, down from the -2% to -4% range indicated in January.

Following its announcement on 9 March about the proposed combination of Dana Incorporated and GKN Driveline, Dana announced on Monday that the new combined business will hold a standard listing on the London Stock Exchange, in addition to being listed on the New York Stock Exchange.

It said the combined group would create a US and UK-led global leader in vehicle drive systems and electric propulsion, that was well-suited to address the long-term demands of global customers, expecting to deliver $235m (£170m) in synergies. Through a standard listing on the London Stock Exchange, Dana said more GKN shareholders would be able to benefit from the “significant value creation” that was expected from the combined group.

Meanwhile, turnaround specialist Melrose issued a statement saying its final offer of 466p in value today and 60% of future value creation, was “clearly superior” to the “hasty break-up” being pursued by the GKN board.

In its own announcement, the FTSE 250 firm said after GKN's planned disposals, its orphaned aerospace division could be left overburdened with up to £3bn of volatile gross pension liabilities - equivalent to 11 times its trading profit, and a ratio Melrose said was three times the average for the FTSE 100. The proposed sale to Dana valued Driveline at around £800m less than the valuation that GKN itself assigned to the business as recently as February, Melrose claimed.