London pre-open: Stocks seen higher; Italian banks in focus
London stocks were set for a positive open on Monday, taking their cue from an upbeat session in Asia.
The FTSE 100 was expected to open 11 points higher at 7,435.
Investors will be mulling over news that the Italian government has been forced to bail out two banks in the Venice region at a cost of £4.6bn. The good assets of Banca Popolare di Vicenza and Veneto Banca will be taken on by Intesa Sanpaolo for €1 while the bad assets will be left on the government's books, in a rescue Prime Minister Paolo Gentiloni said was to ensure "the good health of our banking system".
CMC Markets analyst Michael Hewson said: "So much for the so called new single European rule book and the much vaunted European Banking Union. It appears that there is one rule for Spanish banks, and the recent rescue of Popular Bank, and another for Italian banks.
"Let’s hope the Italian government has deep pockets given that this particular bailout is a fraction of the non-performing loans in the Italian banking system, of which it is estimated there are about €300bn."
On the data front, BBA mortgage approvals are at 0930 BST.
In corporate news, Amec Foster Wheeler said it has completed the sale of its circulating fluidised bed (CFB) boiler business to Sumitomo Heavy Industries for $170m, which will be used to reduce net debt.
The CFB boiler business is the largest part of Amec's GPG unit. The remaining GPG steam generator businesses include the heat recovery steam generator and industrial boilers businesses and these are also expected to be sold during 2017, Amec said.
Ultra Electronics was forced to respond to press speculation over the weekend, after Mergermarket reported it was in talks to acquire its underwater sensors joint venture partner in a bid to strengthen its contractual ties with the US Navy.
The company said it could confirm it was in “advanced discussions” to acquire NYSE-listed Sparton Corporation, subject to regulator and shareholder approvals.
Should Ultra acquire Sparton, the board said it intended to sell Sparton's other business, the Manufacturing & Design Services (MDS) division.