London pre-open: FTSE 100 called higher on oil bounce and Fed reticence

London's larger shares are expected to start on the front foot thanks to a positive Wall Street session and an oil rebound, while mid-caps are predicted to have a tougher time as the Brexit worries continue to impinge.

Sterling was moving higher in the Asian session, up 0.34% against the dollar to 1.2975 and up 0.45% on the euro to 1.1702.

Although minutes of the Federal Reserve's latest rate setting meeting revealed the committee's caution ahead of the EU referendum vote on these shores, the market seemed to breathe a sigh of relief that a rate hike is not immediately around the corner.

Oil prices moved off one-month lows thanks to a larger than expected draw in API inventories.

"The cautious tone from the FOMC minutes on Wednesday may be giving investors a lift today," said analyst Craig Erlam at Oanda. "The Brexit vote alone is likely to deter them from raising rates until at least the end of the year as they wait to see what the knock on effects will be, both from an economic and financial markets perspective."

Thursday will see meeting accounts from the European Central Bank's mid-June June meeting, though like their US counterparts' they will be somewhat outdated but could still move the markets.

There will also be data on UK manufacturing and industrial production data.

CMC analyst Michael Hewson said: "Given the sharp contraction seen in the equivalent May manufacturing PMI numbers it is hard to see how these numbers could match the sharp gains seen in the April numbers. In April we saw a rebound of around 2% in both which was rather surprising. The May numbers are expected to show a decline of in excess of 1% for both numbers."

In company news, Marks & Spencer saw a huge drop in clothing sales in the first quarter as new chief executive Steve Rowe's recovery plan for general merchandise took hold, though reported group sales up 1.3%. Food sales in the 13 weeks to 2 July fell 0.9% on a like-for-like basis, hit by the difference in Easter timing compared to last year, but despite an 8.9% slide in LFL sales from the Clothing & Home as the number of promotions was cut back but Rowe was encouraged despite the "weak market".

Associated British Foods said the weaker pound after last week's Brexit vote had improved the outlook for the current financial year and it no longer expect a decline in adjusted earnings per share for the group. “In our next financial year, these rates would have both positive and negative effects on profit. There would be an adverse transactional effect on the profit margin on Primark's UK sales, currently half of its turnover, a favourable transactional effect on British Sugar's margins and a translation benefit on group profits earned outside the UK, which last year were some 50% of the total,” the company said.

Hospitality group Whitbread announced on Thursday that it has exchanged agreements with Legal & General for the sale and leaseback of its 389-room ‘Hub by Premier Inn’ hotel in Kings Cross, due to open in 2017, in exchange for a 25 year lease agreement. The FTSE 100 company announced plans in April to carry out sale and leaseback transactions during this year, with proceeds of £100m to £150m. Legal & General will pay £84.5m in cash for the property, with an initial payment of £46.5m due on exchange and further staged payments made during the construction of the property.