London pre-open: FTSE to rise after Fed takes dovish stance

The FTSE is set to open around 15 points higher at around 6,788 following mixed sessions in both the US and Asia overnight, which came after the Federal Reserve signalled that interest rates were unlikely to move before next summer.The Fed said in a statement that labour market conditions had improved, but there was still slack. However, it also said that the likelihood of inflation running persistently below 2% had diminished and that inflation had moved closer to its longer-running objective.The Fed voted to continue to slowly cut quantitative easing by reducing monthly purchases of Treasurys and mortgage-related assets to $25bn per month from $35bn previously. Fed chair Janet Yellen said the programme should end in October. "US stocks were initially off a fair bit but the Fed's very dovish stance managed to drive some late gains to leave the S&P marginally higher on the day, while the Dow ended with a small loss," said Alpari market analyst Craig Erlam."It was the statement that investors were really interested in as the economic data has improved dramatically in the second quarter, capped off with the first gross domestic product (GDP) reading yesterday showing the economy grew at a 4% annualised rate, ahead of expectations. Given that the first quarter figure was also revised higher to -2.1%, from -2.9%, I imagine many people's outlooks for growth will paint a much more rosey picture now." That followed ADP's employment report, which showed the US added 218,000 jobs in July after 281,000 in June, falling slightly short of analysts' estimates of 230,000. The report precedes the closely watched official government monthly jobs data on Friday. Turning to today, the agenda includes German unemployment data, which is predicted to come in with a slight decline in the number of people without a job, while the rate is expected to remaining steady at 6.7%. The country is also due to publish its retail sales for June, when it is anticipated to have seen a 1% rise. In this morning's UK company news, construction group Balfour Beatty has called off its planned merger with rival Carillion after Carillion said it would only press ahead with the deal if Balfour ditched plans to sell its Parsons Brinckerhoff US engineering division.First-quarter revenues were down at BT, but underlying figures were more positive and profits were 7% higher than the same period last year. "We have made a good start to the year," said Chief Executive Gavin Patterson, pointing to cost cuts continuing at a similar pace with underlying costs down 3%.Natural gas group BG Group lifted its interim by a tenth after a strong second quarter led to a 9% increase in earnings per share (EPS) in the first half. So-called 'business performance' EPS, which excludes disposals, certain re-measurements, impairments and other exceptionals, totalled 35.5 cents in the second quarter, up 22% year-on-year. This was a strong turnaround from the 3% decline registered in the first quarter and helped first-half business performance EPS improve by 9% to 69.3 cents.NR