London is set to follow Wall Street lower at the outset, with sentiment likely to be dampened by geopolitical concerns.

There are signs that US President Barack Obama may be keen to pick a fight with China over US jobs. Obama launched action at the World Trade Organisation (WTO) to stop Chinese auto industry aid from threatening jobs in the key electoral battleground state of Ohio. China responded with its own WTO action against the US.

Relations between China and Japan are also going through a rough patch, as a territorial dispute has flared up over a group of islands known as Senkaku in Japan and Diaoyu in China. Anti-Japanese protests have been taking place in Japan for a number of days but escalated today on the anniversary of an infamous incident in Manchuria in 1931, when the Japanese blew up a railway in Manchuria, blaming it on dissidents, as a pretext for an invasion of north-east China.

Relevant as well, Chinese house prices rose in fewer cities in August (35 of 70) than they did in the month before (49 of 70).

Spanish bond yields are still being closely watched for any signs of a rebound. The European Central Bank´s Luc Coene has been cited as saying that they may still force the country to ask for help. Spanish loan default data is expected to be released later in the morning (along with the results of the Spanish Treasury´s latest note auction results).

At 9:30 the ONS publishes inflation data for August. The consensus expectation is for consumer price inflation to ease to 2.5% year-on-year from 2.6% and for prices -as measured by the retail price index- to fall to 3.1% year-on-year from 3.2% (consensus 3.0%).

City sources predict the FTSE 100 will open down 27 points from last night's close of 5,894.

House-building and construction firm Galliford Try saw profits soar last year, paving the way for its full-year dividend pay-out to almost double. Group revenue in the year ended June 30th rose 17% to £1,504m from £1,284m the year before. Profit before tax surged 80% to £63.1m from £35.1m the previous year, while earnings per share jumped 89% to 60.9p from 32.2p last year. The divi rose in line with earnings, from 16p to 30p.

The Kentz engineering and construction group has been awarded a shut-down services and operations support contract with Exxon Neftegas within the Sakhalin 1 development project in Far East Russia. The contract is valued at around $50m.

Department store group Debenhams saw like-for-like (LFL) sales rise 3.7% in the final 10 weeks of its financial year, which ran to September 1st. For the full-year, LFL sales were up 1.6%.

Analysts at Deutsche Bank have downgraded their view on shares of Aviva to hold from buy.

JH

Related share prices
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Galliford Try (GFRD) share price
Debenhams (DEB) share price
Kentz Corporation Ltd. (KENZ) share price