London pre-open: Stocks seen touch lower as investors eye Spain, EU summit

London stocks were set to open a little lower on Thursday despite new records in the US session, as investors keep a watchful eye on Spain and look ahead to the release of UK retail sales data and the first day of the EU summit.

The FTSE 100 was called to open six points lower at 7,537.

CMC Markets analyst Michael Hewson noted that it’s deadline day in Catalonia, with the prospect that Spanish Prime Minister Rajoy could be forced to trigger article 155 of the Spanish constitution and seize direct control of the Barcelona parliament unless Catalan President Puigdemont clarifies what he meant in his speech last week.

“As if to pre-empt that there were reports last night that any attempt to do that would prompt a declaration of independence in response. It’s hard to see how this one can end well.”

He added: “It’s also EU summit day today and for all the talk of compromise there seems to be precious little of either coming from either side, with the EU side actually tightening up their guidelines when it comes to money. With nerves starting to fray on the part of business there is a concern that politicians on both sides are playing with fire. A hard Brexit would not only be damaging for the UK but also for Europe, and Ireland in particular.”

Investors will also be digesting economic data out of China. According to the National Bureau of Statistics, third-quarter GDP growth was 6.8% compared to the same period a year ago, in line with expectations.

Meanwhile, September industrial production and retail sales came in at 6.6% and 10.3% respectively, both beating expectations, while investment growth grew at its slowest rate in 18 years.

On the UK data front, retail sales are due at 0930 BST.

In corporate news, sales growth from Unilever fell short of expectations for the third quarter, with turnover negative, though the consumer goods colossus returned to volume growth after five quarters of price-driven expansion.

Chief executive Paul Polman said conditions in developed markets remained challenging and that growth in the quarter was adversely affected by poorer weather in Europe and natural disasters in the Americas, with silver linings being signs of improvement appearing in major emerging markets such as India and China.

Property investment and development company Segro updated the market on its trading for the period from 1 July to 18 October, reporting that it contracted £8.8m of new headline rent during the third quarter, including £3.8m in rent from existing space.

The company said total contracted headline rent for the nine months to 30 September was £36.4m, which was 3% ahead of what the board called a “very strong” prior year comparator.