London pre-open: RBS reports sharp drop in profits

Stocks were being called to start the session higher by about 17 points, ahead of another raft of US economic data, although with the European Central Bank primed for action the latest Eurozone consumer price would likely make for the most interesting read.

To take note of, month-end buying was expected by some market watchers to support equities on Friday.

"As we come to the end of October, and this week, investors will no doubt be doing some month end book squaring, while at the same time getting a fresh snap shot of the health of the European labour market, as well as the latest CPI inflation data," said Michael Hewson, chief market analyst at CMC Markets.

Acting as a backdrop, on Friday morning we learned that headline consumer price inflation in Japan slowed by two-tenths in September to 0% year-on-year, after falling to its lowest level since May 2013.

At 10:00 Eurostat was scheduled to release its latest consumer price data for the euro area in the month of October.

"While inflation is expected to move back out of negative territory this month, zero inflation is still well below the ECBs 2% target and even core prices are lagging well behind at 0.9%. I think it’s clear now that the ECB is going to respond in December and the inflation data could determine how strong its response is.

"More deflationary pressures between now and December could force it into another significant easing with it even being suggested that both a rate cut and more bond buying could be considered," said Craig Erlam, senior market analyst at Oanda.

RBS reports sharp drop in profits

Higher restructuring costs have seen third quarter pre-tax profits at Royal Bank of Scotland (RBS) slump to £2m from £1.1bn in the same period last year. Restructuring costs rose to £847m from £167m in the period and forward guidance was unchanged. Attributable profit was up to £952m from £896m.

Profits soared at International Consolidated Airlines (IAG) in the third quarter thanks to rising revenues, the acquisition of Aer Lingus and lower costs. The British Airways and Iberia owner, fresh from announcing its first ever dividend the day before, also nudged the joystick higher on its full year guidance to an operating profit between €2.25bn and €2.3bn, excluding Aer Lingus.

BG Group posted a 37% drop in third-quarter core earnings but raised its full-year production guidance as output increased sharply in the period. Earnings before interest, tax, depreciation and amortisation came to $1.24bn in the quarter, down from $1.98bn in the same period last year but better than the $1.15bn expected by analysts.
The company lifted its output guidance to between 680,000 and 700,000 barrels of oil equivalent per day from 650,000 to 690,000, as it reported a 26% rise in third-quarter production to 716,000 boed.