London pre-open: FTSE to move higher ahead of services PMI readings

UK markets are set to open on a positive note on Wednesday, despite a generally weak performance from the US and Asia overnight.

City sources predict the FTSE 100 will open around 42 points higher than Tuesday's close of 6,453.97.

Asian markets, with the notable exception of the Nikkei in Tokyo, declined after the Chinese services purchasing managers' index (PMI), which fell to 52.9 from 53.5 the previous month.

The main event of the UK session will be the final reading the domestic services PMI, which is expected to dip slightly compared to October's reading.

"The services sector accounts for around two thirds of UK gross domestic product (GDP) and as such, the performance of today’s services PMI number goes a long way to providing a guide for GDP growth in the future," Joshua Mahony, Alpari research analyst, said. "A very strong 2014 does appear to be continuing to some extent, with markets expecting a reading of 58.5, just some way short of the 58.7 number seen last month."

"Whilst this remains some way short of the 60.5 peak seen in August, it remains a very robust level of economic expansion in the sector and should the figure remain closer to 60 than 50, it is likely to point towards strong jobs and output for the UK economy as a whole."

Services PMIs will also be released from countries across mainland Europe, which comes after Tuesday's disappointing growth and inflation estimates. While Germany is predicted to deliver a slight increase on last month, both Italy and France are expected to come in weaker.

Back on this side of the Channel, Marks & Spencer unexpectedly increased its interim dividend as first-half results were much better than feared, with pre-tax profit flat and much improved cash flow. Group like-for-like sales were up 1% thanks to strong growth in food and a better performance from womenswear.

Pension and asset management group Old Mutual posted a 5% rise in funds under management to £307.6bn in the three months to the end of September. Net client cash flows fell to £600m against £2.6bn at the same time last year. The group said activity in its core South African market remained subdued, but growth remained robust elsewhere in Africa.

Aerospace, defence and energy engineering group Meggitt said that growth will slow towards the end of the year and forecasts organic revenues growing in the low- to mid-single digits in 2015. The company said that trading in the third quarter was "broadly in line with expectations" with organic revenue growth at 5%. However, this growth rate is expected to moderate in the final quarter.