London pre-open: Stocks seen muted ahead of non-farm payrolls

London stocks were set for a muted open on Friday as investors digest a surprise rate cut by China and look to the release of the all-important US non-farm payrolls report.

The FTSE 100 was expected to open three points lower than Thursday’s close at 7,137.

Investors in London will be waking up to news that China has unexpectedly lifted short-term interest rates. The People’s Bank of China raised the interest rates it charges commercial banks on the seven-day, 14-day and 28-day loans, also known as reverse repurchase agreements or repos, by 0.1 percentage point each.

Eyes will also be on the non-farm payrolls report and unemployment rate at 1330 GMT.

CMC Markets’ Michael Hewson said: “We round off the day and the week with expectations high that today’s US employment report will blow the doors off in the same way as Wednesday’s 245k ADP number did. These expectations aren’t unrealistic given that over the last 12 months the ADP and official NFP numbers have only deviated by more than 30k on just two occasions, with an average change of 14k over the last 12 months.

"This would suggest that the 180k estimate being predicted is probably too low, with a figure in excess of 200k not being beyond the realms of possibility. Such a high number given an unemployment rate of 4.7%, would suggest that there is probably still a fair degree of slack in the jobs market. Wages are also likely to be closely watched with a rise of 0.3% expected, with an annualised rise of 2.8%, down slightly from December’s 2.9%.”

Ahead of the payrolls, the focus will be on Markit’s UK services PMI at 0930 GMT.

On the corporate front, residential repair and improvements business HomeServe announced it has acquired shareholdings in Checkatrade in the UK and Habitissimo in Spain.

The FTSE 250 company said the two separate businesses provide access to high-quality tradespeople performing home repairs and improvements via online platforms.

It confirmed it purchased a 40% interest in Checkatrade, and a 70% interest in Habitissimo, with the deals being worth a combined £37m.

Epiris, the portfolio manager of buyout fund Electra Private Equity will sell its Audiotonix business, which manufactures audio mixing consoles, to European private equity firm Astorg, subject to regulatory approval.

From the sale, which is expected to close in the first quarter of 2017, Electra will receive £203m, an uplift of £62m, or 44%, and equivalent to an increase in its net asset value of 133p per share from the value of the investment at the end of last September.

In the year to the end of December, Beazley’s pre-tax profit rose to $293.2m from $284m in 2015, as gross premiums written increased 6% to $2.2bn.

Chief executive Andrew Horton said: "Beazley's performance in 2016 was good across the board. Our increased profits were driven by a higher investment return, but the bedrock of our success remains our underwriting performance, which generated a combined ratio of 89% in 2016 despite highly competitive conditions in many of our markets. Overall premium growth doubled to 6% and we were able to develop a number of growth opportunities, particularly in the US, that enabled us to offset areas where market conditions dictated that we cut back."