London open: FTSE muted as investors mull US rate hike prospects

Stocks in London were little changed in early trade as investors continued to mull the prospect of a December rate hike by the Federal Reserve.

At 0830 GMT, the FTSE 100 was down 0.2% to 6,782.06.

Meanwhile, oil prices retreated. West Texas Intermediate was down 1.6% to $44.71 a barrel and Brent crude was 1.3% weaker at $45.90.

On Thursday, Fed chair Janet Yellen suggested in her testimony before Congress that the central bank could move on rates “relatively soon” as the economy is strong enough to withstand this.

“At this stage, I do think that the economy is making very good progress toward our goals, and that the judgment the [Fed policy] committee reached in November still pertains,” she told the Joint Economic Committee.

Her comments pushed up the dollar, while yields on the 10-year Treasury note hit a high for the year.

Spreadex’s Connor Campbell said: “It appears that the main driver of movement this Friday, at least in the early hours of the session, continues to be the prospect of a Fed rate hike in December. Growing US inflation, and a testimony from Janet Yellen that speculated interest rates could rise ‘relatively soon’, gave the dollar some extra juice yesterday, and it seems that it still has something left in tank this morning.”

By early Friday, the pound was steady against the dollar, but the greenback was 0.3% higher versus the euro and 0.5% firmer against the yen.

In corporate news, engineering distribution firm Electrocomponents rallied after reporting a 44% jump in first half profits to £55.1m.

DIY company Grafton Group rose as it has agreed to by Dutch ironmonger Gunters en Meuser in order to increase its presence in Amsterdam.

Luxury retailer Jimmy Choo rose sharply as it reported revenue growth for the second half and said it was on track to deliver full-year underlying profits in line with expectations.

Specialty chemicals company Bodycote fell despite posting a rise in revenue in the four months to the end of October.

Flybe flew higher after HSBC lifted the stock to ‘buy’ from ‘reduce’, while Premier Oil nudged up after Jefferies upped it to ‘buy’ from ‘hold’.

There are no major UK data due.