London pre-open: Stocks seen lower after Fed minutes

London stocks were expected to open lower on Thursday, taking their cue from the US, where indices ended in the red after the Federal Reserve minutes revealed the central bank was ready to start cutting its balance sheet before the end of the year.

The FTSE 100 was expected to open 69 points lower at 7,262.

The minutes from the March meeting, during which officials approved a quarter-point interest rate hike, revealed that the Fed plans to start shedding the $4.5trn in bonds it is holding on its balance sheet. The minutes stated that reductions should be “gradual and predictable” through the “phasing out” of reinvestments, meaning the Fed won't just stop repurchasing all debt instruments when they mature.

Although no details were given about amounts, policy makers suggested the unwinding would begin "later this year".

Think Markets analyst Naeem Aslam said: "Investors are anxious about the idea of shrinking the balance sheet and are asking questions such as: how will the Fed shrink their balance sheet; what impact will it have on the equity; can they control the damage?

"$4.5trn is a colossal amount and it will not be an easy task to shrink it. The Fed has now signalled their intentions to the market, meaning that the balance adjustment is not far off. Therefore, investors should start thinking about positioning their portfolios accordingly. On the outset, this may seem like a very unusual message from the Fed, but it is not something that was unexpected."

Investors will also be digesting data from China, which showed the service sector expanded at a slower pace in March.

The Caixin China services purchasing managers' index fell to 52.2 from 52.6 in February, marking its lowest level in six months, but still above the 50 threshold that separates contraction from expansion.

In UK corporate news, Legal & General Group said it had completed the sale of its Netherlands unit to Chesnara for €161m (£137.6m), adding that the deal had marginally improved the group coverage ratio, and delivered a small IFRS profit.

L&G is disposing of non-core businesses, focusing capital and resource on core businesses in growth markets where it believes it could achieve significant scale and deliver returns for shareholders. It has already sold businesses in Ireland, France, Egypt, the Gulf, and Suffolk Life and Cofunds in the UK.

Budget airline easyJet reported a 10.6% increase in passenger numbers for March.

Passenger numbers last month grew to 6.33m from 5.72m in March 2016, as the load factor – which gauges how full the planes actually are – rose 1.4 percentage points to 92.7%.

Ferrexpo reported a decline in iron ore pellet production during the first quarter of 2017 as a result of scheduled pellet line maintenance in the first two months of the year.

The Ukraine-focused outfit, which claims to be the world's third largest producer of pellets, saw total first quarter output drop 8.7% quarter on quarter to 2,624 tonnes, which was 9.1% less than in the year-ago period. Starting on 20 March, the company also began a 55-day pellet line refurbishment.

Electrocomponents issued a trading update for the year to 31 March, with revenue growth across the group of 5%.

The company said growth in Europe was 4% through the year, while it was 7% in North America and 4% in Asia and emerging markets.

Polymer maker Victrex has bought Zyex, a manufacturer of polyetheretherketone (PEEK) based fibres for the aerospace, automotive and industrial markets, for £10m in order to explore 3D printing capabilities.

The acquisition is part of the FTSE 250 company’s strategy to focus on selected semi-finished and differentiated products based on PEEK and polyaryletherketone (PAEK) polymers.

Alongside new plans to "go faster and further" with its restructuring programme, Unilever upped its annual dividend guidance and launched a €5bn share buyback, as well as confirming it will sell off its spreads business.

Following a review of the group's strategy after fighting off a bid from US rival Kraft Heinz, the Anglo-Dutch consumer goods group's new plans include establishing an integrated Foods & Refreshment unit, targeting an increased €6bn of cost savings, doubling its cash conversion ratio and a possible review of its dual-headed legal structure.