UK Stocks - Factors to watch on Jan 20

 

Britain's FTSE 100 index is seen opening down 5 points to up 4 points on Wednesday, say financial bookmakers, with Wall Street's advance and solid IBM results overnight offset by weakness in Asian on further signs of tightening policy in China.

The UK blue-chip index closed up 18.75 points, or 0.3 percent, on Thursday at 5,513.14, boosted by strength in pharmaceuticals companies on hopes that U.S.President Barack Obama's healthcare reform plans could be impeded.

U.S. stocks rose strongly on Tuesday, with the Dow and the S&P hitting fresh 15-month closing highs as investors bet that a Republican victory in Massachusetts' Senate race, confirmed after the U.S. markets closed,could stall Obama's reform agenda.

Wall Street also got a boost as technology shares rallied in anticipation of strong earnings from bellwether International Business Machines Corp. After the bell, IBM beat Wall Street's forecasts with its quarterly figures.

But Asian markets dipped back from early Wall Street-inspired gains on Wednesday, with shares in China and Hong Kong faring worst on reports the Chinese government had told some major banks to stop lending for the rest of January, in a further attempt to keep the surging economy from overheating.

This further sign of a tightening of monetary policy in China weighed on commodity prices overnight, and heavyweight oils and miners are likely to be weak as a result.

British jobless numbers will be the main macro focus on Wednesday, with the claimant count seen falling by 2,500 in December, after a 6,300 drop in November, and the unemployment rate seen rising to 8 percent, up from 7.9 percent in the previous month.

Average earnings are seen rising 1.6 percent in November, after a 1.5 percent rise previously.

Minutes from the first Bank of England Monetary Policy Committee meeting of 2010 will also be released at 0930 GMT, with all nine members expected to have backed the decision to leave UK interest rates and the central bank's quantitative easing policy unchanged.

Confederation of British Industry directory general Richard Lambert said on Wednesday the best outlook for the country's economy was a fragile recovery this year that extended into 2011, in a Financial Times interview.

U.S. producer prices will draw attention in the afternoon, with December PPI seen at zero for the month, after a 1.8 percent increase in November, giving a year-on-year rise of 1 percent, down from 1.2 percent previously.

December U.S. housing starts and building permits will also be of interest, together with another swathe of U.S. corporate earnings, including numbers from Bank of America, Morgan Stanley, Wells Fargo WFS.N, State Street, Ebay, and Starbucks. Back in London, Imperial Tobacco shares will trade ex-dividend on Wednesday, taking 2.05 points off the FTSE 100 index.

* GLOBAL MARKETS-Euro hits 4-mth low, China sags on curbs

* US STOCKS-Mass. vote bets, tech lift Wall St; IBM off late

* Tokyo's Nikkei share average closes down 0.25 pct

* FOREX-Euro hits 4-month low vs dlr as stops spur selling

* TREASURIES-Edge up in Asia on bargain hunters

* Oil slips from $79 on China's tighter credit, strong dlr

* PRECIOUS-Platinum hits multi-month high, gold eases

* METALS-Shanghai copper edges lower on tightening signal

UK stocks to watch on Wednesday are:

BHP BILLITON

The world's largest miner gave its most upbeat outlook for commodities sincethe global downturn, reporting record iron ore shipments and setting the stagefor higher metal prices in 2010.

HSBC

The global bank has injected $700 million in fresh capital into its Mexican unit to fuel growth, chief executive Luis Pena said on Tuesday.

GLAXOSMITHKLINE

GlaxoSmithKline hopes to seek approval by 2012 for its experimental vaccine to prevent malaria and will seek only a small profit on the product in order to make it widely available in hard-hit countries, the company said.

INTERNATIONAL POWER

International Power and France's GDF Suez abandoned talks over a possible partnership following discussions with the Financial Services Authority, The Times said.

Investors and brokers commented that the British company should not have waited till 3pm on Monday to publish the statement and said the incident raised questions about the creation of a false market, the paper added.

COMPUTACENTER

Trade paper Microscope has reported that the IT firm has signed a five-year product supply deal with BP, the Times said, with Computacenter to becomeone of BP's Global Reseller Partners and supply all its kit in Europe starting from February.

BRIXTON

Tim Wheeler, the property firm's former chief executive, is suing the property company for unfair dismissal and breach of contract, the Financial Times said.