London pre-open: Stocks to fall as investors mull GDP

London stocks were set to fall at the open on Thursday following solid gains in the previous session, as investors digest the latest UK GDP reading.

The FTSE 100 was called to open 20 points lower at 7,200.

Figures released earlier by the Office for National Statistics showed the UK economy grew by 4.8% between April and June as lockdown restrictions eased, in line with expectations. This left the economy 4.4% below its pre-pandemic peak.

Capital Economics said: "The main driver of the 4.8% quarter-on-quarter gain in GDP growth in Q2 was consumer spending, which jumped by 7.3% q/q.

"Admittedly, the economy continued to be heavily supported by government spending, which rose by 6.1% q/q. But business investment also grew by 2.4% q/q. The main drag on the recovery was the external sector.

"Indeed, with export values falling by 1.5% m/m in June, and imports up by 3.2%, the trade balance moved from a deficit of £0.2bn in May to a deficit of £2.5bn in June. And a larger deficit will probably emerge in the coming months as imports climb by more than exports."

In corporate news, Aviva said it would return at least £4bn to shareholders over the next year as the insurer reported a 17% increase in adjusted interim profit.

Operating profit from continuing operations rose 17% to £725m in the six months to the end of June from a year earlier as Aviva reported its best half-year sales in general insurance for a decade.

The FTSE 100 group said it would return at least £4bn to shareholders by the end of June 2022 including a £750m share buyback starting immediately. Aviva increased its interim dividend by 5% to 7.35p a share.

Holiday company TUI reported a sharp rise in third quarter revenue but said sales were down almost 80% for the first nine months of 2021.

TUI added that cash flow before financing in the third quarter was €320m, meaning it was positive again for the first time during the pandemic.

Third quarter revenue spiked to €649.7m, up from €71.8m in 2020. On a nine-month basis to the end of June it was €1.3bn compared with €6.7bn for the same period last year.