London pre-open: Stocks to edge higher amid ongoing trade concerns

London stocks were set to edge a touch higher at the open on Monday, with trade tensions expected to keep investors on edge.

The FTSE 100 was called to open six points higher at 7,209.

London Capital Group analyst Jasper Lawler said: "The US sharply hiking tariffs on Chinese imports and China threatening to retaliate has thrown into doubt the possibility of the two sides reaching a deal after almost a year of talks.

"There are three possible outcomes from here. Firstly, a deal gets agreed quickly, secondly after extensive further negotiations a deal finally gets agreed or thirdly the talks completely break down and a full-blown trade war ensues. We are definitely not there yet. The base case scenario is that a deal will still be achieved, it is just going to take a lot longer than the market had been pricing in over recent months."

Lawler added that news that Trump will talk with China’s Jinping Xi at the G20 in June has done little to stem risk aversion, with US futures down nearly 1%.

On home turf, sterling was hovering around $1.30 amid growing concerns over Prime MinisterTheresa May’s ability to hold on to power and as cross-party Brexit talks are close to collapse. Next week's European elections were also in focus.

"Labour's insistence on a second referendum is a sticking point which could lead to the collapse of the talks in the coming days," Lawler said.

In corporate news, Metro Bank said its plans to raise £350m of equity capital were well advanced after the bank was forced to reassure their money was safe.

British Gas owner Centrica maintained full year guidance on cash flow and net debt but said a “challenging” environment due to falling gas prices, tariff caps, warmer weather and nuclear outages had forced it to conduct a strategic review of its portfolio.

“While a number of the factors leading to the challenging trading environment are temporary in nature, they will impact financial performance in the first half of 2019 and have also put some further pressure on the outlook for the full year,” the company said.

Polymer solutions provider Victrex reported weakened interim results as group revenue dropped by 13% to £145.7m on the back of a 16% dip in sales volumes to 1,899 tonnes after the performance of its Automotive division dragged figures lower alongside adverse currency movement and consumer electronics headwinds.