London pre-open: Burberry in fashion ahead of Carney testimony

Market sentiment took a hit overnight from weaker than expected trade numbers out of China ahead of what may be a key hearing from Bank of England governor Mark Carney and deputy governor Jon Cunliffe before the Treasury Select Committee on the financial costs and benefits of the UK's membership of the European Union, starting at 09:15GMT.

Against that backdrop, the Footsie was being called to start the session lower by up to 50 basis points or approximately 0.80% alongside similar losses for the main stock gauges on the Continent.

According to the preliminary close the Shanghai Stock Exchange's Composite Index finished the Tuesday session 0.14% higher to 2,901.387.

In parallel, front month Brent crude oil futures are trading down by 1.24% to $40.34 per barrel on the ICE.

Ahead of their testimony, on Monday evening the BoE announced it would provide lenders with extra liquidity in the weeks immediately before and after the 23 June referendum, via three long-term repurchase operations.

The announcement appeared to risk drawing the central bank into the political debate ahead of the vote.

"Whatever the rights and wrongs of last night’s public announcement the bank is running the risk of becoming a political football and while it is surely sensible to implement a policy of contingency planning, surely it would have been just as easy to inform MP’s today that measures were being put in place, and notify the banks the facility was available if needed without making a melodrama out of it?

"Anyone would think we’re voting to leave the euro, we already have our own currency, which means a bank run is highly unlikely," said Michael Hewson, chief market analyst at CMC Markets UK.

Asia's largest economy saw its trade surplus shrink far more quickly in February than markets had anticipated, although some economists cautioned the data was still subject to distortions linked to the Chinese New Year, even as they pointed out signs of underlying strength.

Julian Evans-Pritchard at Capital Economics pointed out how in 2015 the New Year holidays had fallen unusually late in the year, hence provoking distortions in this year's data due to what analysts term 'negative base effects'.

Like-for-like retail sales grew by 0.1% month-on-month in February, down from the 0.2% pace observed in the month before, according to the British Retail Consortium. On a total basis they increased by 1.1%, versus a rise of 1.7% in the same month one year ago.

Burberry in fashion this Brexit season

Fashion chain Burberry had reportedly been seeking help from its financial advisers to defend against a possible takeover bid after it was found that a mystery investor had built up a 5% stake in the company, the Financial Times reported on Tuesday evening.

Insurer Esure declared its confidence for 2016 and a full year dividend of 11.5p per share after year of good progress saw gross written premiums increase 6.3% to £550.3m. This was a payout ratio of 70% of underlying earnings per share, as underlying profit before tax fell 22.7% in what was a highly competitive market. The company tried to obtain an answer from HSBC, the custodian for the shares, but failed, a person close to the company told the newspaper.

Specialist financial services group Close Brothers reported a rise in first half profit despite a challenging market backdrop. For the six months to the end of January, adjusted operating profit was up 2% to £111.2m, while adjusted basic earnings per share edged up 5% to 61.1p. Pre-tax operating profit, meanwhile, rose to £108.7m from £106.2m. The company said the banking division continued to deliver growth at strong returns with 4.0% loan book growth in the first half to £6bn and bad debts at a long-term low of 0.6%.
Winterflood, which provides trading services in the UK, continued to trade profitably despite difficult market conditions, posting adjusted operating profit of £6.8m.

Worldpay's final results were released on Tuesday morning, with some sizeable improvements in revenue and earnings. Revenue improved 9% during the calendar year to £3.96bn, with transaction value also increasing 9% to £401.9bn. Gross profit was up 12% to £860.4m, and operating profit grew 34% ti £166.9m. The company's profit before tax was £19.1m, up from a loss of £47.1m in 2014. Underlying pro forma earnings per share were 6.9p for the year, up 50% on 2014. Worldpay's board did not recommend a dividend, but said it expected its maiden dividend announcement to come with the 2016 interim results.