LONDON (Alliance News) - UK stock indices are set to open tentatively Friday, following the higher close across Europe spurred by reassuring data releases Thursday. The closure of US markets on Thursday and a mixed session in Asia overnight has provided little clear direction.
Spread betters are calling the FTSE 100 to open marginally lower at about 6,650.00 points.
Japanese data came in close to expectations overnight, with unemployment at 4.0% and October CPI up 1.1% year on year. Industrial production was weaker, however, rising just 0.5% month on month, against the expectation of a 2.0% rise.
With no indication that domestic demand is strong enough to reach the Japanese central bank's 2.0% inflation target, "pressure will only increase for further quantitative easing ahead", says Rabobank analyst Michael Every.
Nationwide UK house price data already released Friday has shown a monthly price rise of 0.6%, in line with expectations, while year on year prices have risen by 6.5%, faster than the 6.0% expected.
The latest data will back up the Bank of England decision on Thursday to stop the Funding for Lending Scheme for mortgage lending as it now sees the UK housing market strong enough to support itself.
Some ratings agency action Friday has seen the Netherlands lose its AAA credit rating from Standard & Poor's. S&P cited the country's "less promising" economic prospects and a growth rate lower than European peers in downgrading the county to AA+.
In a sign of how European concerns are shifting away from the potential default of the weakest economies to the poor growth of more core economies, Spain had its outlook raised by S&P to Stable from Negative.
Europe will remain in focus Friday as the eurozone CPI data for November is released at 1000 GMT. The expectation is for a rise of 0.2% month on month and 0.8% year on year. The reading should provide the main data focus of the day.
"It was only a month ago that the weakness in the October Eurozone CPI numbers prompted a 25 basis point rate cut in the ECB?s headline rate earlier this month. Yesterday's German CPI numbers made the prospect of another cut that much less likely at next week?s ECB rate meeting after they jumped sharply in November to 1.6%", says CMC Markets Chief Analyst Michael Hewson.
German retail sales have been disappointing, however, with data from the Federal Statistics Office revealing a 0.8% month on month fall in October, the second monthly fall in a row. Economists had expected to see a rise of 0.5%.
The poor German retail data has sent the euro a few points lower, currently finding support against the dollar at USD1.3600. The pound pushed up to further highs overnight, buoyed by the hawkish signal on the UK economy given from the Bank of England Thursday. Against the dollar, the pound recorded a high of USD1.6374, just a few points away from the 2013 high of USD1.6380 made back in January.
UK mortgage approvals will provide the main UK economic focus of the morning, with data out at 0930 GMT, along with the M4 money supply.
In the corporate calendar, JD sports have released an interim statement confirming the retailer is trading in line with expectations in the run up to the Christmas period. A fairly light day of corporate releases also sees interims from Infinis Energy and Max Property Group.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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