London pre-open: Stocks seen higher as BoE rate decision looms

London stocks are expected to open higher on Monday morning as the Asia session looks to close higher and following the strong non-farm payrolls report that topped off last week, though many minds will be focused on the Bank of England meeting this week.

FTSE 100 is predicted to add 48 points when the index opens on Monday, with pre-market trading in the FTSE 250 pointing to a 280-point rise.

"European markets are poised to start the week higher as the US jobs report was not short of lacklustre by any means," said analyst Naeem Aslam at Think Markets. "However, it has failed to stimulate the confidence which many thought it could.

"Investors have lost their confidence in the Fed’s ability. They believe an increase in rates could prove disastrous with the economy not being able to handle the shock. This means that the odds are stacked in favour of the central bank continuing to pursue its easing monetary policy for some time to come."

Markets tend to look forward and with the BoE increasingly seen by investors as making a rate cut on Thursday, as it looks to to reduce the shock of the EU referendum decision on the UK economy, this will grab more attention.

With Governor Mark Carney having made his dislike of negative interest rates clear, some feel the only option is a shock cut from the current 0.5% base rate all the way down to zero, followed by quantitative easing in August, though odds are pointing to a 25 basis points cut and asset purchases as the most likely option.

Over the week sterling will be increasingly volatile, whatever emerges from Threadneedle Street on Thursday.

Aslam said traders will start positioning themselves for a rate cut scenario and this means more pressure for the pound, while the yield on bonds could go even lower as investors take flight to safety.

In company news, Rolls-Royce has agreed to pay €720m to complete the full takeover of Spanish aero engine component manufacturer Industria de Turbo Propulsores (ITP). The FTSE 100 company, which currently owns a large minority stake in the profitable Bilbao-based business, will purchase the outstanding 53.1% shareholding in ITP from SENER Grupo de Ingeniería in eight instalments over a two-year period.

Plastic products design and engineering company RPC Group updated the market on its first quarter trading on Monday - a quarter in which it continued integrating the acquisition of GCS and made an offer for BPI. The FTSE 250 firm said revenues in the three months to 30 June were significantly higher than the same period last year, due to underlying growth and the contribution of acquisitions. Adjusted operating profit at constant currencies was also significantly ahead of both 2015, and management expectations.

CLS Holdings said it has exchanged contracts to buy two properties, one in Düsseldorf and one in Hamburg, for a total of €49.5m. The Düsseldorf property is to be bought for €43.6m including costs, and generates net rental income of €3.1m, reflecting a net initial yield of 7.1%. The property benefits from a high occupancy rate and presents significant scope for future rental uplifts and other asset management opportunities, CLS said.