London pre-open: Stocks seen steady as May faces another leadership challenge

London stocks were set for a flat open on Wednesday after Theresa May's Brexit defeat in Parliament, as investors wait to see whether the PM can survive another leadership challenge.

The FTSE 100 was called to open just one point higher at 6,896.

May's government is expected to win the vote of no confidence scheduled for this evening after the DUP and hardline Brexiteers in the European Research Group guaranteed their backing. If she survives, she will have until 21 January to put forward her Plan B on Brexit.

London Capital Group analyst Jasper Lawler noted the pound's surge following Parliament's rejection of the deal.

"Currency traders took an optimistic view, looking past the news to what could ultimately be a better result for the UK economy," he said.

"Rather than seeing this as a step closer towards a no deal Brexit, as Theresa May had originally threatened, traders are seeing this as a move towards extending Article 50 and delaying Brexit. The perceived probability of a no deal Brexit is diminishing, which is pound positive."

In corporate news, Pearson expects full-year profits to come in just above the middle of its target range and guided to growth of 8-18% for 2019.

The education and learning specialist reported said adjusted operating profit for 2018 would come in at around £540-545m, narrowing its range from the prior £520-560m.

Technical services group Diploma said first quarter revenues increased by 9% over the comparable period last year.

At constant exchange rates, group revenues increased by 8%, with acquisitions completed last year, net of a small disposal, contributing 4% and underlying growth of 4%. The weakening of sterling during the past quarter provided a small benefit of 1% to reported group revenues.

In a separate announcement the company confirmed that Johnny Thomson had been appointed as chief executive.

Reckitt Benckiser said Rakesh Kapoor had indicated his intention to retire as chief executive officer by the end of 2019.

The company said he would have served more than eight years as CEO, and 32 years at the firm, by the time he steps down. Its board confirmed it had initiated a formal process to appoint his successor, considering both internal and external candidates.