London pre-open: Stocks seen muted as investors digest retail sales

London stocks were set for a muted open on Friday as investors mull the latest UK retail sales data.

The FTSE 100 was called to open just four points higher at 6,220.

Figures out earlier from the Office for National Statistics showed that retail sales recovered in May.

Retail sales volumes, including petrol, rose 12% on the month, coming in well ahead of consensus expectations for a 6.3% increase. On the year, sales were down 13.1% compared to a 22.7% decline in April and expectations of a 16.4% fall.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the overall consumer picture remains bleak.

"May’s recovery in retail sales should not be interpreted as a sign that the economy is embarking on a healthy V-shaped recovery from Covid-19. For a start, volumes still were 13.1% below February’s pre-Covid level. In addition, retail sales account for only a third of households’ overall spending.

"Naturally, spending on goods will recover faster than on services, which usually require human contact and remain largely unavailable. Indeed, households likely have reallocated some of the money usually spent on services to buy goods during the pandemic. For example, some people likely used money usually reserved for gym memberships to buy exercise equipment instead."

In corporate news, Wood Group said it expected a 19% fall in first half core earnings as the coronavirus pandemic hit the oil and gas sector.

The energy industry engineer said adjusted earnings before interest, tax, depreciation and amortisation in a range of $295m - $305m and operating profit before exceptionals of around $80m - $90m.

The order book at the end of May was $7bn, down about 11% since December 2019, of which about $3.5bn was due to be delivered in 2020, Wood said.

Rio Tinto has launched an internal review into its decision to destroy the Juukan Gorge Aboriginal heritage site.

The miner has appointed Michael L'Estrange, a former Australian high commissioner to the UK, to lead the review into the destruction of the site in Western Australia.

L'Estrange, a Rio Tinto non-executive director, will examine the company's heritage management processes and recommend governance improvements. The report is scheduled for October.