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Coutts-LONDON PRE-OPEN: MODEST START AHEAD OF UK INFLATION DATA

February 18, 2014



ENP Newswire - 18 February 2014

Release date- 18022014 - Stocks are set to show a modest rise in early trading ahead of what is set to be a busy data for data, beginning with the release of UK inflation readings.

City sources predict the FTSE 100 will open 12 points higher than yesterday's close of 6,736, lifted by strong gains in Asia overnight after the Bank of Japan announced its plan to extend two programmes offering low cost loans to banks by another 12 months.

Here in the UK, inflation figures for January are expected to show that the consumer price index (CPI) held at 2% last month, driven by slower increases in the prices of food.

In December, prices fell to the government's target of 2% for the first time, which eased pressure on the Bank of England (BoE) to raise interest rates following the recent recovery in the economy.

'Ever since Bank of England Governor Mark Carney announced the changes to forward guidance to remove the focus from just the unemployment rate, the other pieces of tier one economic data have become even more important,' Market Analyst Craig Erlam pointed out.

If CPI has indeed remained at 2%, then this will mean there is no pressure for the BoE to up interest rates, and it would show a reduction in the wage growth and inflation gap.

'This allows the consumer driven recovery to continue as people can buy more with their money,' Erlam explained.

'Of course, this is still not sustainable in the long term if spending is being funded by debt, but it should aid the transition to the next stage of the recovery which involves businesses investing more in an improving economy.'

In other macro-economic news, German economic confidence figures will be released. The ZEW institute's economic sentiment index is tipped to fall to 61.5 in February from 61.7 in January.

The same gauge, but for the Eurozone, is forecast to rise to 73.9 from 73.3 last month.

Trading will resme in the US today after closing Monday to mark Presidents' Day. The Federal Reserve will hold its board meeting on banking supervision tonight, while the Empire State manufacturing index is forecast to show a decline to 10 from 12.51 in January.

Revenue jumps 3.7% at InterCo Hotels

InterContinental Hotels Group posted a 3.7% rise in 2013 revenue to $1.9bn as the company opened 237 hotels and signed a further 444 into the pipeline. Operating profit grew 10% to $668m in the year through December, driven by growth in the Americas, Asian Middle East and Africa and Greater China.

BHP Billiton has reported a 15% increase in interim underlying operating profits, in terms of earnings before interest and taxes (EBIT), to reach 12.4bn dollars. Underlying attributable profit rose by 31% to reach $7.8bn. Volume and cost efficiencies to the tune of $4.9bn led to a 9% increase in the group's underlying EBIT, to 38%, and a 22% underlying return on capital.

The Financial Times' Lex column noted that the miner's results uses 'grand language and talks a lot about 'productivity' as opposed to cost cuts', and that while linked, these are not quite the same. Notably, its full-year dividend was raised by 3.5%, compared to the 15% increase offered up by peer Rio Tinto.

Student accommodation developer UNITE Group has acquired a 1.8 acre site in central Edinburgh, close to the university. The development costs total around GBP38m, with the property expected to deliver returns in line with the company's targets for regional development. The scheme is expected to be complete in time for the 2016/17 academic year.


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Source: ENP Newswire


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