A negative start to the week is very much on the cards today, as geopolitical tensions in Eastern Europe boiled up over the weekend and both Asia and US stocks finished their most recent sessions on a downbeat note.
City sources predict the FTSE 100 will open around 38 points below Friday's close of 6,561.70.
US stocks slumped again on Friday as a pick-up in consumer confidence was overshadowed by ongoing concerns about steep valuations as the first-quarter earnings season got into full swing.
Sentiment was further dampened by heavyweight JPMorgan Chase & Co, which disappointed with its quarterly results ahead of the opening bell. The bank, typically seen as a bellwether for the financial industry, missed both revenue and profit forecasts by a wide margin, sending peers across the sector lower during the session.
Ukraine to launch large scale anti-terrorist operation
Ukrainian President Alexándr Turchínov has given pro-Russian radicals in the east of the country until Monday to lay down their arms.
The deadline follows the wounding of a Ukrainian special forces officer and five other soldiers in a gun battle on Sunday, during operations carried out in the city of Slaviansk.
In response to these events, Ukraine is to launch a large scale anti-terrorist campaign against those groups of radicals who have barricaded themselves in various government buildings in the eastern region of the country.
In a televised address, Turchínov promised that those who lay down their arms and who have not shot at Ukrainian security forces will not be prosecuted.
Kiev will not allow a repeat of recent events in Crimea, he added.
ECB sets its sights firmly on euro strength
Elsewhere in Europe, the European Central Bank's President, Mario Draghi, has sent an unequivocal message that excessive strength in the euro area's currency will not be allowed to derail the recovery.
The single currency finished on Friday at 1.39, with some traders eyeing the possibility of at least another moderate push higher, perhaps even to 1.45.
"The strengthening of the exchange rate
would require, to make our monetary policy stance to remain equally accommodative, it would require further monetary policy accommodation," Draghi said yesterday during the International Monetary Fund and World Bank's spring meetings, which are being held in Washington D.C.
Strengthening currencies traditionally affect the economy through two so-called 'transmission channels', by dampening foreigners' demand for exports and through tighter credit conditions as the currency appreciates.
As for the rest of the world, over in Asia Japanese stocks on the Nikkei 225 tumbled the most in a week in three years, hit by concerns about the recovery of the country's economy.
Michael Hewson, Chief Market Analyst at CMC Markets UK, said that, "even if some investors weren't nervous about the beginning of earnings season before last week, they probably are now".
"[Nerves have increased] after a poor earnings report from JP Morgan on Friday helped already jittery US markets tip lower still, with the S&P 500
hitting its lowest levels in seven weeks, as a combination of concern about overly high valuations and poor Chinese data contrived to keep equity markets firmly on the back foot, while pushing the US dollar, gold and US bonds higher," he explained.
Looking ahead, a number of important pieces of economic data are due out both at home and abroad, including UK inflation, unemployment and earnings, as well as US retail data for March and Chinese GDP.
In this morning's company announcements, after months of negotiations, commodities trader and mining giant Glencore Xstrata said it has finally reached an agreement to sell its Las Bambas copper project in Peru. Las Bambas is being sold for $5.85bn to a consortium 62.5%-owned by MMG, a subsidiary of state-owned China Minmetals Corp, 22.5% by GUOXIN International Investment Corporation and 15% by CITIC Metal Co.
F&C Commercial Property Trust's 2013 profits jumped, boosted by improved investor appetite for UK commercial property. Pre-tax profit rose to £92.2m in the year ended December 31st from £30.3m a year earlier.
A subsidiary of Brooks Macdonald, an AIM-listed wealth management group, has acquired DPZ Capital from its parent company, DPZ Holdings, for an initial consideration of £5.7m. DPZ is a well-established wealth management business based in Jersey, which was founded in 2007.