London pre-open: Stocks seen firmer as oil prices rally

London stocks were set for a firmer open on Monday, underpinned by rising oil prices following reports that Saudi Arabia and Russia have agreed to do "whatever it takes" to keep a floor under prices and extend the production freeze until March 2018.

The FTSE 100 was expected to open 10 points higher at 7,445.

Oanda analyst Craig Erlam said: "The two countries - which are responsible for around a fifth of total daily output - are crucial to the success of the cut and I would now expect other participating nations to get behind the extension as well.

"Of course, with the US taking full advantage of higher prices and increasing output rapidly at the same time, attempts to rebalance the oil market have been more difficult than anticipated. With any extension likely to keep prices elevated, it will be interesting to see whether the US can continue to ramp up production on the same scale as it has in recent months. If so, compliance with any new cut and the rebalancing efforts will be severely tested with both Russia and Saudi Arabia not wanting to lose market share in key markets."

At 0730 BST, West Texas Intermediate was up 1.5% to $48.55 a barrel and Brent crude was 1.4% higher at $51.55.

With the focus on oil, investors were likely to shrug off a slew of disappointing data from China, where retail sales, industrial production and fixed asset investment figures all fell short of expectations. However, the data could hit the UK mining sector.

In corporate news, Vodafone said it had agreed to transfer 35% of its indirect shareholding in Safaricom to Vodacom Group, its sub-Saharan African subsidiary, for 226.8m new Vodacom shares.

The transaction, which has a value of €2.4bn based on Vodacom's closing share price on May 12, will increase Vodafone's ownership in Vodacom to 70% from 65%.

Thomson travel owner Tui remains confident it can grow underlying earnings 10% this year even though losses grew in the first half.

Revenue for the six months until the end of March grew 8.2% to €6.69bn and underlying losses before interest, tax, depreciation and amortisation declined 3.8% to a €214.4m loss, although if the later Easter and currency effects are removed the loss improved by 6.3%.

Electra Private Equity and its investment manager Epiris announced on Monday that its portfolio company AXIO Group had agreed the sale of intellectual property and technology services provider TechInsights to Oakley Capital.

The company said the sale was expected to complete within a fortnight, and was the seventh and final major realisation from the AXIO portfolio.

Based on exchange rates on Monday morning, Electra Private Equity would receive proceeds from the transaction of £26m, taking total cash proceeds received by Electra from its AXIO investment to £455m, or five times the investment’s original cost, with an internal rate of return of 76%.

There are no major UK data releases due on Monday, but Tuesday sees the release of key inflation figures, while the unemployment rate, claimant count and average earnings are due on Wednesday.