London pre-open: Stocks to start higher despite weaker China manufacturing PMI

Stocks are being called to start the session slightly higher despite a weaker-than-expected reading over the weekend on the state of China's manufacturing sector.

At the opening bell, the Footsie is expected to trade higher by six points from Friday's closing level of 7,322.92.

Data published on Saturday revealed that activity in China's factory sector cooled unexpectedly in March, as Caixin's purchasing managers' index slipped from a reading of 51.7 for March to 51.2 for February.

That prompted analysts at Danske Bank to muse that: "Reflation has been the big theme since November and the driver of most financial markets. However, we believe some of the engines fuelling reflation are set to lose steam over the next three months. The main drivers behind the reflation theme have been an acceleration in the business cycle, a sharp rise in inflation and expectations of fiscal stimulus in the US. We believe all three factors are peaking - or close to a peak.

"With reflation set to lose steam, the fuel for the bond bear market is tailing off. In addition, a correction - or a pause - in the equity bull market is normal when the economic acceleration phase is over."

On the economic calendar for Monday were manufacturing sector PMIs in the euro area, UK and US referencing that same month.

Three Fed speakers were also expected to take to the podium starting from 1530 GMT, beginning with New York Fed chief Bill Dudley, followed by his peers at the Philly and Richmond Feds.

Also on a mixed note, the Bank of Japan's index of business confidence for the country's large manufacturers advanced from +10 in the fourth quarter of 2016 to +14 for the first three months of 2017 (consensus: +14).

Reckitt to sell unit to raise funds for takeover

Consumer products maker Reckitt Benckiser confirmed it was considering options for its food business, which includes the French’s mustard brand, on Monday.The FTSE 100 firm was the subject of press speculation over the weekend, with the Sunday Times suggesting it was seeking a possible buyer for the food division to fund the takeover of US baby food manufacturer Mead Johnson. "We have ... decided to initiate a strategic review of Food where we will explore all options for this great business," Reckitt’s board said on Monday.

Babcock was chosen as the preferred bidder to become the Marine Systems Support Partner for the Royal Navy's new Queen Elizabeth Class Aircraft Carriers and Type 45 Destroyers. The MoD programme is potentially worth £360m spread across seven years.

Industrial equipment rental company Ashtead Group has bought New York-based Pride Equipment Corporation for £279m. The FTSE 100 company's US subsidiary Sunbelt Rentals bought Pride to further enhance its position in the New York City market with a complementary firm renting smaller and medium sized equipment, which offers cross selling opportunities.