London pre-open: Stocks seen higher on stimulus hopes

London stocks were expected to open higher on Friday, underpinned by expectations of fresh stimulus from the Bank of England.

The FTSE 100 was set to open 34 points higher than Thursday’s close at 6,538.

The mood was supported by BoE governor Mark Carney, who on Thursday hinted at the prospect of further interest rate cuts over the summer.

CMC Markets’ Michael Hewson said: “While a rate cut probably won’t come in July given the governors assertion that the MPC would assess situation at the July 14 meeting, further measures could well get implemented at the August meeting when the bank sets out its latest inflation report, along with revised growth forecasts where we are quite likely to see the 2016 forecast lowered sharply from the current 2%.

“Yesterday we saw Q1 GDP confirmed at 0.4% and with Q2 likely to struggle to grow at all, its highly questionable that we would have got anywhere near 2%, whichever way last week’s vote went.”

Meanwhile, investors were digesting some uninspiring data out of China.

The Caixin manufacturing purchasing managers' index, a private gauge of factory activity, dropped for the third month in a row to 48.6 in June from 49.2 in May, missing expectations for it to remain unchanged. A reading below 50 indicates contraction.

China’s official manufacturing PMI fell to 50.0 in June from 50.1 the previous month, in line with expectations.

Capital Economics said: “The manufacturing PMIs continue to disappoint. But given the recent resilience of the service sector and signs of strength in construction, we still aren’t overly concerned about the near-term outlook for China’s economy.”

Still to come, UK manufacturing PMI is at 0930 BST. In the US, Markit manufacturing PMI is at 1445 BST, while ISM manufacturing is at 1500 BST, along with construction spending.

In corporate news, BHP Billiton's plans to settle claims over the 2015 Samarco mine disaster suffered a major blow on Friday when a Brazilian court reinstated a AUD$8bn public civil claim.

BHP and joint-venture partner Vale agreed a $3bn settlement in March, however Brazil's Superior Court issued an interim order suspending the ratification and reinstated the public civil claim for clean-up costs and damages against Samarco, Vale and BHP.

"BHP Billiton Brasil intends to appeal the decision of the Superior Court of Justice," BHP said in a statement.

Synthomer completed the acquisition of rival Hexion Performance Adhesives & Coatings for a total cash consideration of $226m, funded via existing cash resources and the utilisation of additional credit facilities.

Hexion´s China business, which accounts for about 1.0% of the parent company´s sales, would be subject to a deferred completion, which was expected for the third quarter of 2016. Ahead of its full-year numbers the polymer manufacturer said its outlook, in constant currency, remained unchanged and in-line with the Board´s expectations.

Pharmaceutical giant AstraZeneca announced on Friday it has entered into agreements to support its strategic focus on three main therapy areas - respiratory, inflammation and autoimmunity; cardiovascular and metabolic disease; and oncology.

The FTSE 100 firm said the agreements include two of AstraZeneca’s potential new medicines for dermatitis and psoriasis, allowing the company to further simplify and sharpen focus on new medicines in the main therapy areas.

AstraZeneca said the first agreement is with LEO Pharma for the global licence to tralokinumab in skin diseases, with LEO making an upfront payment of $115m and up to $1bn in milestone and royalty payments.

The second agreement sees AstraZeneca and Valeant Pharmaceuticals terminate the licence for brodalumab in Europe, with AstraZeneca entering into a new agreement with LEO Pharma for the region.