London pre-open: Traders focused on US jobs report, risk of break-out in US Treasury yields

London´s top flight index was being called to start the session higher, with traders now focused on Friday's US jobs report for February and the ensuing reaction in the Treasury market, as Thursday´s ECB meeting faded in the rear-view mirror.

The FTSE 100 was seen beginning the day 22.3 points up from Thursday´s closing mark of 7,314.96.

"The US labour data is the main macro highlight of the day. Released on Wednesday, the solid ADP employment report kept the appetite tight in the US dollar. Although the correlation between the ADP and nonfarm payrolls (NFP) is low, the consensus for today’s NFP is a feasible 200K versus 237K printed a month earlier," said Ipek Ozkardeskaya, senior market analyst at LCG.

Consensus was also calling for a dip in the US unemployment rate from 4.8% in January to 4.7%, alongside gains of 0.3% month-on-month and 2.8% year-on-year for average hourly earnings.

More important perhaps would be the reaction of the US Treasury market to Friday's non-farm payrolls report.

The yield on the 10-year US Treasury was at technical resistance towards 2.61% in overnight trading, just a tad below its late-2014 highs, with a move up towards 2.80% or even 3.0% possibly on the cards if resistance was breached.

On a related note, on Thursday analysts at UBS commented on how the recent rapid shift in near-term rate hike expectations Stateside had seen only relatively small moves in FX markets, while bonds had continued to trade within their recent trading ranges.

However, the risks that might be about to change were rising, UBS said.

For his part, SocGen's 'perma-bear' Albert Edwards weighed in a with a word of caution, saying: "Accelerated Fed rate hikes will cause tremors in the Treasury bond markets, forcing rates up, most especially in the two year — just like 1994."

Analysts positive on Aerospace&Defence

In terms of broker recommendations in the pre-market, Berenberg sounded a positive note on the aerospace and defence sector.

Within civil aerospace, GKN and Senior remained "attractive value plays", the German broker said, adding that it remained 'Neutral' on Meggitt and Rolls Royce.

In defence, it favoured BAE Systems, but it downgraded Ultra Electronics to a 'Hold' after a strong rally and despite the improved outlook. As for Cobham it was too early to be overly bullish on the pace of recovery.

For their part, analyst at N+1 Singer weighed in with a 'Hold' on Spirent.

BT agrees to separation of Openreach

Under pressure from the telecoms regulator, BT Group has agreed to legally separate its Openreach infrastructure arm.The new Openreach will have roughly 32,000 staff transferred from BT, plus its own management, independent board and own logo, but still be within the BT group.

Amec Foster Wheeler on Friday said it it had won separate contracts in Brunei and Kuwait for undisclosed values.The first contract is for five years with Brunei Shell Petroleum for the rejuvenation of assets in Brunei. There are two one-year options to extend, and includes Brunei Shell Petroleum's oil and gas assets in the South China Sea.The second contract is for six years with Petrochemical Industries Company, a subsidiary of the Kuwait Petroleum Company (KPC), for the integration project between its Olefins III, Aromatics II and ZOR Refinery in the State of Kuwait.

Bookmaker and gambling operator William Hill announced the appointment of Philip Bowcock as chief executive officer on Friday, with immediate effect.The FTSE 250 company had appointed Bowcock as its interim CEO in July 2016, having previously been chief financial officer of the company.

Property developer Segro has bought the remaining 50% stake in the Airport Property Partnership joint venture it does not already own from Aviva Group Entities for £365m.The acquisition is to take advantage of the government’s recent decision to build a third runway at Heathrow Airport as the company expects expansion in the medium to long-term for space around the airport.