London pre-open: Stocks to rise on positive US cues as oil rallies

London stocks were set to rise at the open on Wednesday, taking their cue from a positive session in the US as oil prices rally.

The FTSE 100 was called to open 32 points higher at 7,569.

London Capital Group analyst Jasper Lawler said: "Oil was a central driving force behind the positive close on Wall Street overnight, amid reports that supply disruptions are expected to outweigh the impact of the recently agreed OPEC increase in production. An earlier pledge by Saudi Arabia to lift production to a record was shrugged off by the markets, as the US pressed allies to cut Iranian oil imports to zero by early November.

"Oil charged over 2% higher on supply disruption fears pushing through $76 per barrel. Traders will now look towards oil inventory data later today, signs of a strong drawdown in addition to the supply disruption fears could be sufficient to lift oil back towards $80 per barrel."

Investors will eye the Bank of England's Financial Stability report at 0930 BST and the CBI distributive trades survey for June at 1100 BST.

"The pound could come under more pressure today, as focus turns to BoE Governor Mark Carney, as he delivers the BoE’s financial stability report," said Lawler. "This report is being released amid growing trade tensions between US & China, with concerns growing that a softening of the Chinese economy could hurt the UK’s financial stability by more than originally thought. Traders will be watching closely for Carney to shed further light on the situation."

Earlier, the latest survey from lender Nationwide revealed that UK house prices rose at their slowest annual rate in five years in June. House prices were up 2%, compared with 2.4% growth in May.

Nationwide's chief economist, Robert Gardner, said: "Indeed, annual house price growth has been confined to a fairly narrow range of circa 2-3% over the past 12 months, suggesting little change in the balance between demand and supply in the market over that period.

"There are few signs of an imminent change. Surveyors continue to report subdued levels of new buyer enquiries, while the supply of properties on the market remains more of a trickle than a torrent.

"Looking further ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates."

In corporate news, Whitbread said it expected annual results to meet expectations as it reported declining like-for-like sales at its Premier Inn and Costa coffee businesses in the first quarter.

Total sales at Premier Inn rose 2.5% but at hotels open a year or more sales fell 0.9%. At the Costa coffee chain, which Whitbread plans to spin off, like-for-like sales fell 2%.

Distribution and outsourcing group Bunzl slowed to a "more normal" pace of growth in the second quarter of the year.

Group revenue for six months ending 30 June is expected to have increased 5% at the reported level or 11% if the effect of currency swings is ignored.