London pre-open: Stocks seen lower as May set to meet Tory backbenchers

London stocks were set for a weaker open on Monday as the pound recovered some poise following last week's losses, with politics firmly in focus as Prime Minister Theresa May prepared to meet with Tory backbenchers.

With the pound trading flat against the euro at 1.1384 and 0.1% higher against the dollar at 1.2760, the FTSE 100 was expected to open 35 points lower at 7,492.

Oanda analyst Craig Erlam said: "Equity markets in Europe are expected to start the week a little softer, with the FTSE leading the losses as the UK index pares Friday’s gains and is weighed down by small gains in the pound.

"The UK index came under some early pressure in futures markets on Friday as it became clear that we were headed for a hung parliament but as has now become the norm, it quickly rebounded to end the day more than 1% higher. While the negative knee jerk reaction to these results continues to happen, the time taken to recover is getting shorter and shorter, with traders perhaps learning from past experience and capitalising on any dips.

"While the election result and upcoming Brexit talks will likely remain a key talking point this week, there’s also a number of other events that markets will be very focused on. The start of the week may be quiet but we’ll get monetary policy decisions from the Federal Reserve, Bank of England and Bank of Japan on Wednesday, Thursday and Friday, respectively. The Fed will be of particular interest with markets now fully pricing in a rate hike and instead more concerned with whether they’ll signal another this year or focus more on balance sheet reduction."

May had been due to meet with Tory backbenchers on Tuesday, but the meeting was brought forward a day after the 1922 Committee demanded to meet the PM earlier than planned.

In corporate news, Mitie withheld its final dividend as the outsourcing group tumbled into losses, though the new management team expect a return to "modest growth" in underlying profits this year.

Reported revenue fell 1% in the year to 31 March to £2.13bn, with an operating loss of £42.9m due to accounting adjustments arising from a review of the business and a resulting loss per share of 14.7p. Adjusted revenues rose marginally with the core facilities management business growing 3%, while adjusted operating profit fell by 14% to £82.0m.

Weir Group announced on Monday that it had entered into an agreement to acquire KOP Surface Products, a provider of advanced surface pressure control technologies, systems and services for the oil and gas industry for $114m in cash.

The FTSE 250 company said KOP - which held “leading” market positions in Asia, with an emerging business in the Middle East - was being acquired from Akastor ASA, a Norwegian-listed investor in oilfield services.