London pre-open: Stocks seen higher after China tariff cut

The FTSE 100 was called to open 55 points higher at 7,537.

CMC Markets analyst David Madden said: "In a bid to improve China-US trading relations, overnight Beijing confirmed its intensions to cut tariffs on $75 billion worth of US imports in halve. The Chinese government didn’t specify which products would be impacted by the move. It will come into effect on February 14 - when the US will cut tariffs from 15% to 7.5% on $120 billion worth of Chinese imports.

"The announcement from Beijing drove up stocks in Asia, and equity markets in Europe are called higher on the back of it too."

Hopes of a coronavirus vaccine were also underpinning sentiment after reports on Wednesday of a breakthrough by a research team in the UK.

On home shores, sterling took a hit on Wednesday amid reports of plans to revise MIFID II - the regulations that govern financial markets in Europe after Brexit.

London Capital Group analyst Jasper Lawler said: "One can only assume the point of the changes would be to cut out The City from as much financial activity pertaining to the mainland as possible. It just highlights how much there is to play for in the upcoming negotiations, and downside risks still overhanging sterling.

"It might have been worse were it not for data showing a surprise acceleration in the UK service sector."

In corporate news, Royal Mail said recent trading was broadly in line with expectations but the company warned that its outlook was challenging.

Letter volumes will fall faster than expected next year and the parcels and letters business is more likely to be loss-making, Royal Mail said.

Tate & Lyle said it expected full year earnings per share growth to be in a range of flat to low single digits on a constant currency basis as in maintained guidance for the full year.

Underlying trade for the three months to end-December was consistent with the first half and in line with expectations.

Compass Group said its organic revenue for the three months ended 31 December grew 5.3%, which it said was driven by strong levels of new business wins and good retention rates, particularly in North America.

The FTSE 100 foodservice company, which was holding its annual general meeting later in the day, said its cost action programme - announced in November - was progressing as expected, with the benefits offsetting the anticipated impact of lower volumes in the business and industry division in Europe.