London pre-open: Stocks seen lower amid oil price decline

London stocks were set for a weaker open on Wednesday, taking their cue from a downbeat US session and amid declining oil prices.

The FTSE 100 was expected to start 20 points lower than Tuesday’s close at 6,997.

Oanda’s Craig Erlam said: “European equity markets are expected to open a little lower on Wednesday, with the recent drop in oil prices partially responsible but also as indices continue to struggle for momentum as they attempt to break above their recent highs.

“Oil prices have been in decline over the last couple of days which will be part of the problem. With doubts being cast over the OPEC output deal and API on Tuesday reporting inventories rose more than expected last week – a rise which if confirmed by EIA today would all but offset last week’s decline – further declines in oil could lie ahead. From a technical standpoint, a break below $50.50 could trigger a move back towards $49. A similar break below $49 in WTI could prompt a move back towards $47-47.50.”

There are no major UK data due but in the US, wholesale inventories are at 1330 BST, Markit’s services PMI is at 1445 BST and new home sales are at 1500 BST.

In corporate news, Lloyds Banking Group set aside a further provision of £1bn for compensation for mis-selling payment protection insurance in the third quarter of the year, as net income and profits both fell. For the three months ended 30 September, net income fell 1% to £2.85bn and underlying profits dropped by 3% to £1.91bn.

Pharmaceutical giant AstraZeneca reported that its drug Lynparza had positive results from a clinical trial to treat women with mutated ovarian cancer. In a phase three SOLO2 trial, Lynparza tablets were used as a monotherapy to treat platinum-sensitive replaced BRCA-mutated ovarian cancer and the trial found that there was a “clinically-meaningful and statistically-significant improvement” of progression-free survival among patients compared to those on a placebo.

International distribution and outsourcing group Bunzl announced a trading statement for the period since 30 June on Wednesday, with overall performance consistent with expectations. The FTSE 100 firm said at constant exchange rates, group revenue for the third quarter increased by 7%, with 3% contributed by acquisitions and 4% due to the impact of additional trading days compared to the same time last year.Underlying revenue for the quarter was at a similar level to the third quarter last year.