London open: Stocks edge up ahead of US retail sales, bank earnings

London stocks edged higher in early trade on Friday, taking their cue from positive sessions in the US and Asia, as investors eyed US retail sales and bank earnings.

At 0820 BST, the FTSE 100 was up 0.2% at 7,854.86, with sentiment lifted by a cooler-than-expected US inflation print.

Figures released on Thursday by the US Department of Labor showed that the producer price index for March fell 0.5% against expectations for a flat reading. Year-on-year, it rose 2.7%, down from 4.9% in February and below consensus expectations for a 3.4% increase.

Richard Hunter, head of markets at Interactive Investor, said: "While the consensus remains that there is one more hike of 0.25% to come in May, there are no more rate rises expected thereafter this year.

"Indeed, some are projecting that interest rate cuts could follow before the end of the year, depending on the severity of the recession which is expected to follow, although this is not currently the Fed’s base case."

The focus on Friday will be on US retail sales data March, due at 1330 BST. Investors will also watch out for first-quarter results from JPMorgan, Citigroup and Wells Fargo.

In UK equity markets, Dechra Pharmaceuticals rocketed after confirming late on Thursday that it has entered into discussions with private equity firm EQT about a possible all-cash recommended offer for the company. Under the terms of the offer, Dechra shareholders would receive 4,070p per share in cash.

Dechra said that if a firm offer is made, it is currently being discussed that the private equities investment department of the Abu Dhabi Investment Authority (ADIA), through a wholly-owned subsidiary of ADIA, would be a co-investor with EQT.

Online electricals retailer AO World shot higher after saying it expects full-year profit to be around the top end of its guidance range as it continues to see positive traction from its initiatives to cut costs and improve margins.

888 surged after the William Hill owner said it expects "significantly" higher adjusted core profit for this year, but that revenue could be lower by a low-to-mid single digit percentage.

Iconic boot maker Dr Martens ticked up despite lowering profit guidance for the second time in four months due to higher costs at its Los Angeles distribution centre and lower wholesale revenues.

Fashion retailer Superdry tumbled as it withdrew its "broadly breakeven" full-year profit guidance, pointing a challenging trading environment and disappointing retail sales in February and March.