London pre-open: Stocks seen muted amid no-deal Brexit fears

London stocks were set for a muted open on Friday after Prime Minister Boris Johnson told ministers to prepare for the "strong possibility" of a no-deal Brexit.

The FTSE 100 was called to open just six points higher at 6,605.

CMC Markets analyst Michael Hewson said: "With UK/EU trade talks extended to the weekend, both the EU and the UK have started to prepare the ground for a no deal outcome.

"EU Commission President Ursula Von Der Leyen outlined a number of contingency plans, or mini deals, which included various measures to deal with aviation safety, air and road connectivity, as well as fisheries, in order to ensure no disruption on the 1st January 2021.

"Prime Minister Boris Johnson also put the UK on notice for a no deal outcome, saying that he was sceptical about the prospect of an agreement.

"The pound did come under pressure but overall, there still seems to be some optimism that pragmatism will prevail as the 31st December deadline gets closer, and the realisation slowly dawns of the potential economic damage that could ensue in the days after a no deal outcome. An outcome that in the current circumstances would simply heap economic pain on top of economic pain."

In corporate news, aircraft engine maker Rolls-Royce said it expected to turn cash flow positive in the second half of 2021 as air travel demand started to recover from the Covid-19 crisis driven by vaccination programmes.

The company maintained full-year guidance, adding it was targeting target at least £750m in free cash flow, excluding disposals, as early as 2022 and at least £2bn from disposal proceeds.

GlaxoSmithKline and Sanofi have delayed their Covid-19 vaccine programme after the vaccine showed a weak response in people aged 50 and over. The companies said they would do more work on the vaccine and expected it to be available in the fourth quarter of 2021.

Intercontinental Hotels Group said it had reached agreement for further amendments to its revolving credit facility, including an additional waiver of the covenants at 31 December 2021, together with a relaxation to the covenants at 30 June 2022 and 31 December 2022.

The said the covenant relaxations were based on a theoretical severe downside scenario. It said its minimum liquidity covenant of $400m would continue while the amendments were in place, and would be tested at 31 December 2021, 30 June 2022 and 31 December 2022.