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LONDON (Alliance News) - London stocks are set to open broadly lower Wednesday, hurt by renewed concerns over the global economy after the World Bank cut its European growth forecasts for the next two years, predicting continued sluggishness in the euro area.
The FTSE 100 is called to open 84 points lower at 6,458. The index closed Tuesday at 6,452.2, up 0.6%, but the Dow Jones Industrial Average closed down 0.2%.
"The lower open expected in Europe has not been helped by the World Bank's new global growth forecasts for this year and next, both of which were revised lower," says Craig Erlam at Alpari. "While the bank warned against relying on the US economy to drive global growth, it did highlight the opportunity that lower oil prices represents for oil-importing nations including China and India."
The World Bank said the global economy is forecast to grow moderately this year, citing stronger growth in the US and Britain but weakness in the euro zone and Japan. "The forecast for Euro Area growth is a sluggish 1.1% in 2015, rising to 1.6% in 2016-17," the World Bank said, cutting its 2015 forecast from 1.8% previously and 2016 from 1.9%.
Brent crude is quoted at around USD45.90 a barrel early Wednesday after touching a new six-year low of USD45.16 during Tuesday's session. US benchmark West Texas Intermediate was quoted at USD45.38.
"While the continued weakness in oil prices is welcome at the consumer level, the current weakness is starting to raise concerns that it could usher in a situation that causes some unwelcome side effects elsewhere in the global economy as oil producers start to feel the pinch of lower prices on their margins," says Michael Hewson at CMC Markets.
The fate of the European Central Bank's government bond-buying programme could be decided Wednesday, when Europe's top court issues an opinion on the legitimacy of the scheme.
One of the advocates-general of the European Court of Justice, Pedro Cruz Villalon, is to release a non-binding interim position on the ECB's so-called Outright Monetary Transactions programme, which was unveiled at the height of the euro debt crisis in 2012 but has never been activated.
French December inflation data and eurozone November industrial production are due at 0745 GMT and 1000 GMT, respectively, followed by US December retail sales at 1330 GMT.
In UK corporate news, fashion house Burberry reported third-quarter underlying retail revenue of GBP604 million, up 15%, with double-digit growth in the US and Europe, Middle East, India and Africa and robust performance in mainland China and Korea, though it warned about weaker trading in Hong Kong.
Online supermarket Ocado said December sales rose 14.8% on the year, with the online-only grocer saying that its "solid" growth performance from the fourth quarter continued into the run up to Christmas, with sales on its biggest day leading up to Christmas of nearly GBP6 million, up 15% year-on-year.
Barratt Developments said it is on track for a significant improvement in its full-year results after reporting a rise in total completions, average selling prices and forward sales in the first half of its fiscal year. The FTSE 100-listed house builder said total completions in the six months to the end of December rose 12.5% to 6,971 from 6,195 a year earlier and average selling prices for its houses rose 8.4% to GBP229,000 from GBP211,200 a year ago.
Japan's Nikkei closed down 1.7% at 16,795.96. The Hang Seng in Hong Kong is down 0.4% at 24,128.86 and the Shanghai Composite is down 0.4% at 3,222.437.
By Ian Edmondson; ianedmondson@alliancenews.com
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