London pre-open: Stocks to open flat ahead of CPI, Fed

London stocks are expected to start Thursday in circumspect form after losing substantial ground the previous session but after Wall Street made small gains overnight and amid mixed Asian markets.

Traders expected the FTSE 100 was expected to start off around one point lower, having closed at 6,701.59. The pound was up slightly overnight against the dollar at $1.2676 and softening against the euro to €1.1116.

All eyes in the UK will be on inflation data coming later in the morning, plus Brexit developments in Westminster throughout the day but most of all on the Federal Reserve, which is due to give its monetary policy announcement after the London close. The market is pricing in a 72.3% probability of an interest rate hike.

"However, the real concern for the market is what comes next," said analyst Jasper Lawler at London Capital Group. "With growing fears over the health of the global economy, the markets simply don’t think the US economy can handle higher rates.

"Traders will be watching for dovish signs, such as the dropping of the phrase 'further gradual rate rises' from the statement and a softening of the dot plot from three hikes to at most two. In short, if the Fed must hike today, and they will struggle to justify not hiking on current US economic strength; then it will need to be a dovish hike to prevent the US equity markets dumping once more. The dollar has traded lower across the week in anticipation of a dovish hike."

Back in the UK, the Office for National Statistics will publish November inflation numbers at 0930 GMT, where economists are expecting the headline figure to dip to 2.3% from 2.4%. The core CPI reading is tipped to decline to 1.8% from 1.9%.

Weighing on the FTSE will be the big fall in oil prices the previous day on reports that Russia is planning to increase output, with Brent Crude dropping to $56.34 a barrel and WTI to $46.

In company news, GlaxoSmithKline has agreed a deal with Pfizer to combine their consumer health businesses into a joint venture generating £10bn of annual sales. GSK, which will have controlling stake of 68%, said the combination of the two businesses is expected to generate annual cost savings of £0.5bn by 2022 at a cash cost of £0.9bn and non-cash costs of £0.3bn.

James Fisher & Sons said it has won a £30m contract with Daewoo Shipbuilding & Marine Engineering to design, build and deliver a deep search and rescue vehicle for the Korean navy, together with training and in-service support. The vehicle will be delivered in 2021.

Online gambling firm 888 said it expected full year adjusted EBITDA would be in-line with expectations as the second half delivered further progress against the group's strategic objectives. 888 said it had continued its momentum in Sport, Casino and across regulated European markets.