London pre-open: Greece continues to be in focus, US retail sales on agenda

London's blue chips are expected to ignore strong gains seen in the US and Asia overnight, as investors await further details of reports that Germany is weighing up a pay-per-reform deal with Greece.

City sources expect the FTSE 100 will start the day around 11 points lower than Wednesday’s close of 6,830.27.

"Negotiations between Greece and its creditors may have taken a step forward yesterday after it was reported that Germany is considering a kind of pay-per-reform deal that would see Greece drip fed the loans as it implements its reforms," said Oanda senior market analyst Craig Erlam.

This would enable the troubled country gain access to a portion of the funds this month on the condition it implements an initial round of reforms.

"Even if these reports aren't entirely accurate, it may suggest that the institutions are considering a slightly different approach to this that will allow Greece to avoid defaulting at the end of this month and continue negotiations," Erlam said.

"This is by no means the sustainable long term deal that we’d like to see but it would prevent a default for now and that’s the most important thing."

Datawise, Thursday's session is looking pretty quiet, although all eyes will be on US retail sales later on in the session.

In company news, oil and gas industry services provider Petrofac said it has landed a four and a half year contract with Petroleum Development Oman to provide services for its Yibal Khuff project. The total contract value is expected to be around $900m, with around one-quarter of the revenues relating to professional services.

George Osborne has announced the government will begin the process of returning Royal Bank of Scotland to private ownership in the “coming months,” even though it may cause a loss for taxpayers. Disposing of RBS in its entirety “will take some years,” Osborne added, insisting there was “no reason” why a retail offering can’t be held at a later date.

Meanwhile, UKFI has cut its stake in Lloyds further, to 17.9%, after selling 779,900 shares, according to a regulatory filing.

Elsewhere, the state will sell half of its remaining stake in Royal Mail, leaving it with about 15% of the company on its books. Reports indicate the shares are likely to be priced at approximately 500p a piece.