London pre-open: Stocks to drop as investors mull Fed minutes

London stocks were set to drop at the open on Thursday, tracking weakness on Wall Street after the latest Federal Reserve minutes revealed that the US central bank wants to keep lifting short-term interest rates gradually this year.

The FTSE 100 was called to open 71 points lower at 7,210.

David Madden, market analyst at CMC Markets, said: "US equity markets finished in the red last night after the minutes from the Federal Reserve meeting in January showed that economic sentiment was picking up, and there was some evidence that prices were beginning to rise. The US central bank believes it will reach its inflation target of 2%, but they are not afraid of the cost of living becoming too high. Traders are fearful the US central bank might quicken their pace of interest rate hikes.

"The reaction by traders sent the yield on the US 10-year government bond to 2.95% - its highest in four years. The US dollar index pushed higher, which in turn put pressure on gold. The inverse relationship between the greenback and gold has been strong lately, and last night was not expectation."

In corporate news, a weak second half in Centrica's UK business, due to falling customer numbers and a possible government-imposed price cap led to a 17% fall in adjusted operating profits to £1,252m.

Barclays declared its intention to more than double dividend payouts in 2018 to 6.5p per share after lower costs helped lift profits last year.

The bank confirmed a 3.0p payout for 2017, as expected, as it reported 10% increase in annual profit to £3.5bn but an attributable loss of £1.9bn after costs associated with the sale of its African subsidiary sale and US tax reforms.

British American Tobacco reported on what it claimed was a record year, with its “transformational deal” of acquiring Reynolds American leading to a 37.6% surge in revenue to £20.29bn.

The FTSE 100 tobacco giant said its adjusted, organic revenue was ahead 2.9% at constant exchange rates at £15.71bn, while its adjusted, organic profit from operations was up 3.7% at £5.91bn. That was off a total profit from operations of £6.48bn - up 39.1% on 2016.

On the data front, fourth-quarter UK GDP is due to be released at 0930 GMT, while the CBI distributive trades survey is at 1100 GMT.