RBS settles US claim, Sainsbury's sales slip

London open

The FTSE 100 was predicted to climb by almost 11 points upon opening on Wednesday, which would recoup its small loss from the day before.

Stocks to watch

Royal Bank of Scotland agreed to pay $1.1bn (£846) to settle two legal claims in the US that it allegedly mis-sold mortgage securities in the run-up to the 2008 financial crisis. The settlements, involving its subsidiary RBS Securities, are with the National Credit Union Administration Board, which regulates credit unions, but does not include lawsuits with the US Department of Justice and the Federal Housing Finance agency.

Sainsbury blamed food deflation for a fall in like-for-like sales in the second quarter, masking the growth in transactions and volumes in the period. Total retail sales fell 0.4% in the 16 weeks to 24 September, including the completion of the Argos acquisition on the second of the month, with like-for-like retail sales down 1.1%.

Trading at TUI was in-line with the company´s expectations, the travel operator said in a pre-close trading update. For the year to 18 September, the tourism group reported a 1% year-on-year increase in total revenues, alongside flat average selling prices.

Smiths Group reported a drop in profits for the year to the end of July as its John Crane division suffered on the back of tough conditions in the global energy market. The company said it expects a broad continuation of the trends experienced in 2016, with ongoing challenges in John Crane’s end markets offset by moderate underlying revenue growth in its other divisions.

Newspaper round-up

The UK's solid economy and efforts to cut red tape have propelled the country up three places in the global competitiveness rankings, according to the World Economic Forum. The WEF's influential report said the UK's status as a digital pioneer and support for entrepreneurs had cemented its position as "one of the most competitive economies in the world". - The Daily Telegraph

Struggling German banks pose a looming threat to the European Union, which will “hit a fence” as the bloc struggles with a series of crises over the coming years, the former chancellor Lord (Norman) Lamont of Lerwick has warned. Lord Lamont said that the EU was at risk of buckling under the weight of distressed lenders, not only in peripheral countries such as Italy but also in its powerhouse economy. - The Times

Investors paid several million pounds to lend to the government yesterday after the Treasury issued public debt at a record negative interest rate. The Debt Management Office, which manages the nation’s borrowing, sold £400m of inflation-linked 36-year debt for £870m. The yield on the issue was -1.77%, the lowest in history, and means that investors will get only £855m back in 2052 after inflation. - The Times

US close

US stocks gained ground on Tuesday as better data on services activity and outstanding consumer confidence numbers offset lower oil prices.

The Dow Jones Industrial Average added 133.5 points or 0.7% to close at 18,228.30, while the S&P 500 increased 13.83 or 0.64% to 2,159.93 and the Nasdaq picked up 48.22 points or 0.92% to end at 5,305.71.

This was despite a retreat in crude oil prices after Saudi Arabia played down expectations for a production agreement, calling the OPEC meeting “consultative” and dashing hopes that an agreement will be made.