(Alliance News) - Stocks in London are set to open higher on Friday, spurred on by a higher US finish to resume the week's rebound after a wobble on Thursday.
In early UK company news, Ultra Electronics said it is minded to recommend a GBP2.58 billion takeover offer from former London listing Cobham.
IG says futures indicate the FTSE 100 index of large-caps to open 31.00 points higher, or 0.4%, at 6,999.30 on Friday. The FTSE 100 closed down 29.98 points, or 0.4%, at 6,968.30 on Thursday.
"The recovery from the Monday sell-off continued apace yesterday, with the FTSE 100 being the notable party pooper, slipping back due to weakness in three to four of its bigger cap stocks, while the rest of Europe closed higher for the third day in succession," said Michael Hewson, chief market analyst at CMC Markets.
This week has seen an impressive turnaround in Europe after a Monday slump due to worries over an uptick in coronavirus cases across the world.
More than half of all European adults are now fully vaccinated, the EU said on Thursday, as countries across Europe and Asia battled fresh outbreaks blamed on the fast-spreading Delta variant.
Friday's purchasing managers' index data across Europe will be closely watched to see how the pandemic recovery is unfolding. The eurozone composite PMI, to be released at 0900 BST, is expected to improve to 60.0 points in July from 59.5 in June, according to FXStreet.
Meanwhile, both the UK manufacturing and services PMIs - due at 0930 BST - are expected to soften, though still remain at elevated levels.
Ahead of this, data showed UK retail sales returned to growth in June as supermarkets benefited from the Euro football championship.
Retail sales by volume were up 0.5% month-on-month in June, ahead of the market forecast of 0.4%, according to FXStreet, and rebounding after a 1.3% decline in May. The largest contribution came from food stores, where volumes rose by 4.2%.
"June's retail sales have picked up again following the dip seen last month, with the main driver coming from food and drink sales, boosted by footfall fans across Britain enjoying the Euros," said Darren Morgan, ONS director of Economic Statistics.
Amid the football fever in England, non-food stores reported a fall of 1.7% in monthly sales, their first month-on-month fall since the start of the year.
Sterling was flat on its level of USD1.3754 at the London equities close on Thursday.
In early UK company news, Ultra Electronics said it is minded to recommend a GBP35.00-per-share takeover approach from Cobham.
The aerospace and defence engineering company confirmed that on Wednesday it received the non-binding proposal in cash, noting that shareholders would also be entitled to its interim dividend of 16.2 pence announced at the start of the week, making the offer worth GBP35.16 per share.
The takeover offer, together with the interim dividend, values Ultra at around GBP2.58 billion and representing a premium of 63% to its closing price on June 24, the day prior to the start of the offer period. It also marks a 42% premium to Thursday's closing share price of GBP24.70.
"Having considered the proposal, the board has indicated to Cobham that it is at a value the board would be minded to recommend to Ultra shareholders, subject to consideration and satisfactory resolution of other terms and arrangements, including the establishment of safeguards for the interests of Ultra's stakeholder groups," said Ultra.
The latest approach follows a number of earlier proposals, Ultra noted, the first of which was made on June 29 at a price of GBP28.00. The latest offer, including the dividend, is 26% above this initial approach.
Ultra did add that there can be no certainty a firm offer will be made.
Lender NatWest said it has entered a memorandum of understanding with Permanent TSB as part of its phased withdrawal from Ireland.
The memorandum is for the proposed sale of a package comprising performing non-tracker mortgages and performing micro-SME loans, as well as Ulster Bank's asset finance business in the Republic of Ireland and a subset of its branch locations there. The proposed package included approximately EUR7.6 billion of gross performing loans as at March 31.
As part of the consideration for the proposed deal, for which financial terms were not disclosed, NatWest will receive a "minority non-consolidating equity stake" in Permanent TSB.
"In line with our strategy of a phased withdrawal from the Republic of Ireland, I am pleased that we are today announcing a significant update in the form of this non-binding memorandum of understanding with Permanent TSB. This builds on the recently announced sale of the majority of Ulster Bank's performing commercial banking business to Allied Irish Bank," NatWest Chief Executive Alison Rose said.
Vodafone reported first-quarter revenue growth, leaving it on track to meet full-year guidance.
Total revenue for the quarter to June 30 was up 5.7% to EUR11.10 billion, with service revenue rising 3.1% on a reported basis and 3.3% organically.
"I am pleased to report that we are back to service revenue growth in Europe, as well as Africa. This growth was broad-based within both Consumer and Business segments, with the vast majority of our markets contributing," said Chief Executive Nick Read.
The telecommunications firm said it is on track to deliver full-year guidance with adjusted earnings before interest, taxes, depreciation and amortisation to be between EUR15.0 billion and EUR15.4 billion. This would compare to adjusted Ebitda of EUR14.39 billion in financial 2021.
The euro traded at USD1.1695 early Friday, lower than USD1.1775 late Thursday. Against the yen, the dollar was quoted at JPY110.26 versus JPY110.08.
In the US on Thursday, Wall Street ended with modest gains, with the Dow Jones Industrial Average ending up 0.1%, the S&P 500 up 0.2%, and the Nasdaq Composite up 0.4%.
Hewson said: "This positive finish should translate into a higher European open despite a weaker Asia session, and with Japanese markets closed."
In China, the Shanghai Composite closed down 0.7%, while the Hang Seng index in Hong Kong tumbled 1.1%. The S&P/ASX 200 in Sydney closed up 0.1%.
Financial markets in Tokyo were closed on Friday for Sports Day.
Gold was quoted at USD1,807.80 an ounce early Friday, up from USD1,806.52 late Thursday in London. Brent oil was trading at USD73.58 a barrel, up from USD72.84 late Thursday.
Alongside the European readings, a US PMI is due at 1445 BST.
By Lucy Heming; lucyheming@alliancenews.com
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