London pre-open: Stocks set to gain despite stronger pound

London stocks are expected to rebound on Wednesday after a mixed day on Wall Street but positive Asian session.

The FTSE 100 was being called 14-15 points higher after finishing on 7,686.8 a day earlier. Sterling is stronger, however, up 0.2% against the dollar at 1.3423.

Overnight the Dow Jones finished just the wrong side of flat, while the S&P 500 was the other side of the line but the tech-heavy Nasdaq 100 gaining 0.32% after earlier hitting a fresh intraday high.

Market analyst Jasper Lawler at London Capital Group said London and other European indices should start positively, though Italian politics is still a cause for concern.

"With the exception of the shining tech sector lifting the Nasdaq, a broadly uninspiring end to trading overnight in Wall Street led to a mixed session in Asia. A slightly livelier looking start to trading in Europe is expected led by the FTSE MIB which is on track to claw back a chunk of the 1.1% sell off from Tuesday."

He added: "Whilst Italy is over the worst politically speaking, economically the picture is far from rosy. Italy’s new Prime Minister Giuseppe Conte vowing to put in place economic policies which could add to the nations heavy debt load sent investors into panic mode, searching for safe haven government debt, such as US treasuries, pulling yields lower."

Italy's new Prime Minister, Giuseppe Conte, however gave a boost to the euro as he revealed the new government had no plans to leave the euro zone.

Looking to economic factors with potential to move markets, the Halifax House Price Index is due at 0830 BST and Bank of England policymaker Silvana Tenreyro will speak and take questions at a CBI economic briefing in Belfast at 1100 BST.

Perhaps the key economic event on the economic calendar will be a speech by European Central Bank chief economist, Peter Praet at 0800 BST, followed by the US foreign trade numbers for April which are set to be published at 1330 BST and gaining more interest due to the White House's recent tariff-fuelled feuds centred on this area.

In company news, budget airline easyJet reported increased passengers and capacity utilisation in May, a month when 2.5% of planned capacity was affected by French and Italian industrial action and bad weather. Passenger numbers rose 3.7% year-on-year and load factor was up 1.8 percentage points to 93.3%.

WH Smith enjoyed stronger sales growth in the third quarter of its trading year, it said on Wednesday, with the retailer confident its mix of high street, railway stations and airport locations will allow it to contend with the current economic uncertainty affecting many rivals. In the 13 week period to 2 June, the group grew sales 4% with like-for-like sales up 1% compared to last year, which were both an improvement on the flat total sales and 1% decline in the first six months before.

Workspace Group issued its full-year results for the year ended 31 March on Wednesday, reporting an increase of profit before tax of £170.4m - up from £88.8m - with “significant increases” seen in both trading profit and property valuation. The FTSE 250 serviced office outfit said it saw strong growth in net rental income of 21% to £95.6m, resulting in 20% growth in adjusted trading profit after interest to £60.7m.

Overnight, US-based International Paper walked away from takeover talks with Smurfit Kappa, bemoaning the Dublin-based cardboard packing group's lack of communication after it rebuffed approaches in February and March.