London pre-open: Stocks seen muted as China downgrades growth forecasts
London stocks were set for a muted open on Tuesday following the release of disappointing Chinese services data and after China downgraded its growth forecasts.
The FTSE 100 was called to open two points lower at 7,132.
Overnight, China's Caixin/Markit services purchasing managers' index for February came in at 51.1, down from January's reading of 53.6 and marking the lowest level since October. It was also well below economists' expectations for a reading of 53.5.
In addition, Beijing said it now expects the economy to grow between 6% and 6.5% this year, down from 6.6% growth in 2018. However, it also unveiled $298bn in tax cuts as it looks to boost growth.
London Capital Group analyst Jasper Lawler said: "Tax cuts, increased lending and infrastructure spending, rather than continuing along the deleveraging route, will get some quick wins for China. However, this may be a dangerous route in the long run. High levels of debt are a problem, which will only be exasperated as growth slows.
"Whilst shares across Asia were broadly lower, the plans to increase spending boosted shares in China. The CSI300 hit a 9-month high in early trade before giving back some gains. As more details over the economic package are released over the coming days, we could see Chinese shares extend their rally."
On the UK data front, Markit's services PMI is at 0930 GMT.
In corporate news, revenue and operating profit growth sped up at Ashtead Group in the third quarter of the equipment rental group's financial year.
Underlying rental revenue increased 19% in the third quarter to £1.05bn and operating profit 21% to £297.2m. As financing costs increased reflecting a higher average interest rate and higher average debt levels, offsetting a lower US federal tax rate, earnings per share were up 18% to 40.0p.
Sports betting and gaming group GVC Holdings reported underlying profits at the top end of its full-year guidance as it said it was on track to extract the benefits from its acquisition of Ladbrokes Coral.
Underling earnings before interest, tax, depreciation and amortisation of £755.3m was up 13% on the previous year, after net gaming revenue increased 9% to £3.57bn.
Middle East-focussed private healthcare operator NMC Health announced the formation a joint venture with Hassana Investment Company - the investment arm of the Saudi Arabia government-managed pension fund, the General Organization for Social Insurance (GOSI).
The group said the joint venture was formed by its five assets in Saudi Arabia and an additional cash injection at closing, and GOSI's contribution of its 38.88% stake in Tadawul-listed National Medical Care Company at a price of SAR 54 per share. At the closing of the transaction, NMC would own a 52% stake and GOSI a 48% stake of the joint venture, with NMC having operational control.