London pre-open: FTSE set for gains ahead of Financial Stability Review

Shrugging off yesterday's losses, London's blue chips look set to track gains seen in the US and Asia overnight as traders brushed off the much worse-than-expected revision to US first-quarter economic growth and instead choose to look forward.City sources predict the FTSE 100 will open around 19 points higher than yesterday's close of 6,733.62."An extremely disappointing first quarter gross domestic product revision was brushed aside by US markets yesterday, with markets choosing to hang their hats on more recent economic data, which continues to show improvements in patches," CMC Markets' Michael Hewson said."This rebound in US markets should translate into a positive European open this morning, though any upside is likely to remain constrained by concerns about events in Iraq."Today's session will see the announcement of the most recent Financial Stability Review, at which Bank of England (BoE) Governor Mark Carney is widely expected to unveil plans aimed at reducing high-risk mortgage lending. Alpari Market Analyst Joshua Mahoney said: "The focus of today's session will be financial stability and primarily we are expecting to see substantial energy placed within the topic of the housing sector. With house prices in London having seen a markedly greater growth than elsewhere in the country, we are expecting to see some sort of plan to cool the potentially dangerous double figure rises in the house prices, without stifling nationwide values which in many cases are still trying regain the ground lost following the post-2008 crash. "This will most likely come in the form of new guidance with regards to lending from the banks rather than relying strictly upon interest rates as a tool to calm the market. As such there could be some weakness in sterling arising from the view that the BoE is tightening within a sector that has driven substantial sterling growth over recent years." In this morning's company news, it was disappointing news for AstraZeneca shareholders after an advisory committee to the US Food and Drug Administration (FDA) voted 11 to two that current evidence from clinical studies does not support an accelerated approval for use of olaparib as a maintenance treatment for women with a specific type of ovarian cancer. Energy services firm Wood Group said it expects 2014 operating profits to be in line with expectations and higher than last year, but reported a mixed performance in its PSN division in the first half. In a trading update for the six months to June 30th, the company said that the Production Services unit of PSN has performed ahead of expectations, but Turbine Activities has disappointed.Ophir Energy's 50%-owned Okala-1 well did not find significant hydrocarbons in the target areas, the company said today, marking a disappointing end to its 2014 exploration campaign in Gabon. Okala-1, located in the Mbeli Block offshore Gabon, encountered a thick section of Aptian salt and well developed sandstones in the Gamba and Dentale formations, but failed to show the Cretaceous sands in the pre-salt section as hoped.FTSE 250 consumer goods packaging firm DS Smith said full-year profit more than doubled despite challenging economic conditions across Europe and said the current year has started well and in line with expectations. Pre-tax profit surged to £167m in the 12 months to April 30th from £82m a year earlier as revenue increased 10% to £4.03m. NR