London pre-open: Stocks set for muted start

London stocks were set to nudge just a touch higher at the open, with a much quieter day on the cards after Thursday’s session saw investors react to rate announcements from the Federal Reserve and the Bank of England.

The FTSE 100 was expected to start seven points higher than Thursday’s close at 7,006.

On Thursday, the Bank of England kept interest rates and its asset purchase programme unchanged at 0.25% and £435bn, as expected.

On Wednesday, the Fed lifted the funds rate by 25 basis points to between 0.50% and 0.75%, also as expected. However, the central bank was more hawkish about the future path of rate hikes, signalling three next year, up from two indicated in September.

CMC Markets’ Michael Hewson said: “The pound initially held up well to the US dollar onslaught but soon fell back in the wake of the Bank of England keeping rates on hold and suggesting that the recent rebound in sterling may well cause an undershoot in future inflation expectations. Sadly this very admission caused the pound to slip back and could well have the effect of lifting these expectations back up again.

"Yesterday’s strong performance for European markets was helped in no small part by this very currency weakness as exporters got a boost with the DAX hitting its highest levels this year, and pushed the FTSE 100 back above the 7,000 level for the first time since the end of October.”

There are no major UK data releases due but US housing starts are at 1330 GMT.

In corporate news, developer of intellectual property-based businesses IP Group announced on Friday that it has agreed to acquire Parkwalk Advisors, the UK's leading university spin-out focused EIS fund manager, for an initial consideration of £10m.

The FTSE 250 company said Parkwalk, founded in 2009, is the largest EIS growth fund manager focused on university spin-outs, having raised over £100m to date with the majority of funds coming from leading private wealth platforms and having backed over 60 companies across its managed funds since inception.

In 2016, Parkwalk committed over £40m to UK university spin-outs and has been a long-term co-investment partner of IP Group, having co-invested over £17m in 14 investment rounds during 2015/2016.

Rentokil Initial has agreed to merge its Workwear and Hygiene divisions with Germany's Haniel & Cie Holding Co.

The joint venture will bring together Rentokil Initial's Workwear and Hygiene businesses in 10 countries principally in the Benelux and Central & Eastern Europe regions, with Haniel's businesses in 17 countries which operate under the CWS-boco brand.

Rentokil said the JV will have combined revenues of about €1.1bn and adjusted profit before interest, tax and amortisation of about €130m.

Construction company Balfour Beatty has sold its 80% stake in five street lighting private finance initiative projects to funds managed by Equitix, an investment firm, for £33m.