City sources predict the FTSE 100 will open around four points higher than yesterday's close of 6,532.43, marking a small reversal to yesterday's heavy losses which pushed the FTSE 100 to a seven-week low as weakness in the mining and financial sectors weighed heavily.
Despite data earlier in the session showing an unexpected surge in UK construction activity last month, investors were beginning to scale back risk appetite ahead of a busy end to the week, full of central bank meetings and economic data from across the globe.
Last night US markets also slipped, with the Dow Jones Industrial Average finishing below 16,000 for the first time in two weeks on the back of uncertainty regarding Federal Reserve monetary policy. Stocks were falling for the third straight day, beginning December on a weak note despite it being the start of seasonally strong month for equities.
On both sides of the Pond eyes remain firmly fixed on the US November jobs report due Friday, with investors wary that a stronger-than-expected increase in non-farm payrolls could prompt the Federal Reserve to begin scaling back stimulus at its next meeting on December 17-18th. These fears were renewed Monday after data showed that US manufacturing activity jumped to a two-and-a-half-year high last month.
It is set to be a busy day on the macro front, with announcements out Stateside on the balance of trade, the Beige Book Fed survey, crude oil
inventories, non-manufacturing ISM, services ISM, MBA mortgage applications and new home sales.
Meanwhile, the European Union will see the first release of the latest GDP figure, as well as the PMI composite and the publication of its most recent retail sales. In the UK, figures will be release on the country's official reserves, along with both the services and composite PMIs.
In company news, AMEC, which supplies consultancy, engineering and project management services, has been awarded a five-year project management consultancy services contract for full field development projects offshore United Arab Emirates (UAE) in a deal worth £76m.
Woes at Tesco continued as the British supermarket group blamed a tough grocery market for a decline in UK third quarter sales. Tesco said like-for-like sales in the period had fallen 1.5% due to a grocery market that had become more difficult since the summer due to pressure on consumer finances. The company's total UK sales lifted 0.9%.
Wealth management firm Brewin Dolphin posted a solid increase in annual funds under management and underlined its confidence in future trading with a 20 per cent increase in its full year dividend. Total managed funds at September 29th rose to £28.2bn from £25.9bn the same time a year earlier. A full year dividend of 8.6p has been recommended, up by a fifth from last year.
Sage Group's annual pre-tax profit was broadly flat at £164.1m, reflecting the cost of non-core disposals. In the year ended September 30th the software company's profits were hit by a £188.2m exceptional charge due to the disposal of products in an effort to streamline the portfolio.
Full year profits are likely to be 'substantially ahead' of expectations at St Modwen, thanks to the strengthening property market and timing of its financial arrangements. The FTSE 250 property regeneration specialist also announced transactions had completed on two major projects, with pre-let to Marks & Spencer in the Longbridge area of Birmingham and a £80m sale in London's Elephant & Castle.