London pre-open: Stocks seen muted ahead of payrolls report

London stocks were set for a muted open on Friday as investors eyed the release of the latest non-farm payrolls report.

The FTSE 100 was expected to open just two points higher at 7,476.

CMC Markets analyst Michael Hewson said: “Expectations around today’s report are for 181k new jobs to be added, however despite the apparent resilience in the US labour market, this week’s ISM employment components for both manufacturing and services were weaker than expected, and this could introduce some downside risk to today’s jobs numbers.

“More importantly wages growth has remained stubbornly weak, and has thus far show little signs of pushing upwards. The unemployment rate is expected to fall further to 4.3% from 4.4%, with attention on the overall correlation with the participation rate likely to be key here.

“This has invited speculation that there may well be a lot more slack in the US labour market than central bankers are able to measure, and it is in this context that the focus on wage growth will remain as intense as ever, and on this measure is expected to slip back from 2.5% to 2.4%, which in all likelihood will be enough to keep the hawks at bay.”

The payrolls report, employment rate and average hourly earnings are due at 1330 BST.

In corporate news, Royal Bank of Scotland posted second quarter adjusted operating profits of £1.69bn, up from £761m one-year ago and ahead of analysts' forecast for £1.04bn.

Operating expenses meanwhile printed at £2.4bn for the second quarter.

Paysafe has received a £2.96bn cash takeover offer from private equity groups Blackstone and CVC.

The FTSE 250 group's directors have recommended shareholders accept the offer and including their own stakes and irrevocable pledges from institutional funds have 12.2% for the deal so far.

Education publisher Pearson said it was slashing its interim dividend by 72% as it kicked off a restructuring programme that will involve cutting 3,000 jobs.

Underlying sales edged up to £2bn from £1.9bn, while adjusted operating profit came in at £107m compared to £15m in the first half of 2016, reflecting savings from the 2016 restructuring programme, a benefit from phasing and the strength of the US dollar versus the pound, offset by cost inflation and other operational factors.

The company cut its dividend per share to 5p from 18p.