LONDON MARKET PRE-OPEN: Shares Seen Higher; Sky Hikes Dividend

LONDON (Alliance News) - London stocks are set to open higher Wednesday, following a flurry of UK company updates, with broadcaster Sky increasing its full year dividend as it posted a rise in pretax profit.

Sky posted a pretax profit of GBP1.52 billion for the year to end-June, up from GBP1.03 billion a year before, as revenue rose to GBP9.99 billion from GBP7.45 billion. The reported results include Sky Italia and Sky Deutschland following their acquisition in November. On an adjusted basis, including the results of the Italian and German business for the full year and at constant currency, pretax profit rose to GBP1.20 billion, up from GBP1.13 billion a year before, on revenue of GBP11.28 billion, up from GBP10.78 billion.

The company proposed a final dividend of 20.5 pence, which takes its total dividend for the year to 32.8 pence, up from 32.0 pence a year before.

There also have been results from Barclays, Taylor Wimpey and Capita, among others. GlaxoSmithKline is expected to release its second-quarter results at 1200 BST.

In its first set of results since the board sacked Antony Jenkins as chief executive earlier this month, Barclays reported an increase in second-quarter net profit, and revealed plans to intensify the scaling down of its non-core assets.

Net profit increased to GBP1.15 billion in the quarter ended June 30, compared with GBP161 million in the corresponding period the prior year. Adjusted pretax profit, a closely watched measure of the bank's performance, increased to GBP1.85 billion in the quarter, up from GBP1.66 billion year-on-year, ahead of the GBP1.75 billion forecast by analysts.

Barclays's interim dividend remains at 2.0 pence per share.

IG says futures indicate the FTSE 100 to open 28 points higher at 6,583.30. The index closed up 0.8% at 6,555.28, taking back about half of Monday's losses.

Later in the day, attention will shift to the US Federal Open Market Committee two-day meeting, with its interest rate announcement due at 1900 BST. Ahead of the decision, Wall Street ended higher Tuesday. The DJIA closed up 1.1%, the S&P 500 ended up 1.2% and the Nasdaq Composite finished up 1.0%.

The US Federal Reserve is widely expected to leave US interest rates unchanged at the meeting. However, investors will pay attention to the accompanying monetary policy statement, after a recent hawkish speech and Congressional testimony by Fed Chair Janet Yellen intensified expectations that the bank would hike rates later this year.

Many analysts still expect the Fed to raise US interest rates at its next meeting in September and will be closely scrutinizing the statement for any hints about the timing of the first US rate hike in nine years.

Lloyds Bank highlights that the bigger question is whether the Fed wants to send a clearer signal that it intends to hike at its next meeting in September. The bank notes that at the start of the previous interest rate tightening cycle in 2004, the statement was changed to read "the Committee believes that policy accommodation can be removed at a pace that is likely to be measured".

"A similar change in language this time would strongly suggest that the FOMC intends to hike at the next meeting, unless the economic data take a decisive turn for the worse," says Lloyds.

CMC Markets chief market analyst Michael Hewson says, "a lot can happen, not only data wise between now and [when a rate hike arrives], but there also remains a great deal of uncertainty between now and then with respect to the China growth story, as well as a successful outcome to what is currently going in Greece."

Greece's government launched negotiations Tuesday on a new multi-billion-euro bailout programme, insisting that it has taken all the measures agreed with creditors for reaching a deal. Representatives of Greece's creditors started talks at a technical level, visiting Greece's General Accounting Office and the Bank of Greece, a Greek finance ministry official said Tuesday.

The same official said "technical groups are expected to complete their work by Friday 31 July" adding that no further meetings are expected during the weekend, "unless otherwise specified".

According to the same official, mission chiefs of the institutions overseeing the bailout - the European Commission, the European Central Bank, the International Monetary Fund as well as the European Stability Mechanism are expected to arrive in Athens on Wednesday. The official said both sides aim to complete the deal "as soon as possible."

The Greek Parliament passed two reform packages that were part of the conditions agreed on July 13 in Brussels to secure up to EUR86 billion in new financing. The major sticking point is whether Greece will have to pass another round of difficult and politically divisive austerity measures, such as pension reforms, before negotiations conclude.

In Asia on Wednesday, the Japanese Nikkei 225 closed down 0.2%. In China, stocks are mixed, with the Hang Seng up 0.2%, and the Shanghai Composite down 0.2%.

Alongside the Fed interest rate decision, in the economic calendar are UK consumer credit and mortgage approvals data due at 0930 BST. In the US, pending home sales are due at 1500 BST, while EIA Crude Oil stocks are at 1530 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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