LONDON (Alliance News) - UK stocks are expected to open little changed Tuesday, as investors take their positions ahead of a raft of data releases from around the world and after Ukrainian President Petro Poroshenko allowed a ceasefire with pro-Russian separatists to expire late Monday.
In the UK, the FTSE 100 is called to open flat to slightly higher Tuesday, having closed at 6,743.94 on Monday. IG and CMC Markets expect the blue-chip index to open up approximately 12 points at 6,756, while Alpari indicates it will open 1 point lower.
The index closed firmly lower for the month of June as it was hit by some worrying US gross domestic product data, the World Bank's downgrade of its global growth forecasts, and escalating violence within Iraq. However, it is geopolitical tensions in Ukraine that looks set to be one of the index's driving forces as July gets underway, after President Poroshenko announced the resumption of a military offensive against pro-Russian separatists in eastern Ukraine after allowing a ceasefire to expire late Monday.
In in a television address following a meeting with top security advisors, the pro-Western president said that Ukraine had spent ten days showing the world "that we want to peacefully settle this foreign-provoked conflict."
However, after accusing the rebel forces of engaging in "criminal acts" to undermine the "unique opportunity" to implement his peace plan, he said he "will go on the offensive and liberate our country."
That said, "the situation in Ukraine is unlikely to weigh too heavily on the markets at this stage as it merely signifies a return to a situation that the markets had already accepted, to an extent," says Craig Erlam, a market analyst at Alpari. "The restart of fighting is clearly far from ideal, but it did seem inevitable given that in recent days there have been protests in Kiev about the pro-Russian rebels refusal to fully respect the cease fire, with claims being made that they were taking advantage of the opportunity and attacking Ukrainian troops and making further gains," he adds.
"With a big week of data coming up starting today, investors are looking for further evidence of an underpinning of recovery in China, the US, as well as the UK, and hoping that the situation in Europe doesn't lose too much of its early momentum from the first part of this year," says Michael Hewson, chief market analyst at CMC Markets.
In data released overnight, the Chinese manufacturing purchasing managers' index rose to a six-month high in June after a weak start to the year, the results of a survey by the China Federation Of Logistics And Purchasing and the National Bureau of Statistics revealed. The manufacturing PMI rose to 51 in June, in-line with economists' expectations, from 50.8 in May.
Meanwhile, revised estimates released by Markit and HSBC bank confirmed that manufacturing activity rebounded in June. The HSBC manufacturing PMI rose to 50.7 in June from May's 49.4, marking the first signs of improvement since December 2013.
"In China, the manufacturing sector appears to be benefiting from a round of targeted fiscal stimulus aimed at providing a small boost to an economy that was showing signs of slowing earlier this year," says Alpari's Erlam. "The People’s Bank of China has also played its part, with its own targeted monetary easing, and the efforts appear to be bearing fruit," he adds.
Still to come in the data calendar Tuesday, the latest reading of the Italian Markit manufacturing PMI, which is released at 0845 BST, is expected to come in at 53.0 in June, slightly lower than the 53.2 posted in May.
The French and German economies are forecast to continue their divergence, with France's manufacturing PMI, which is due at 0850 BST, expected to come in at 47.9, slightly higher than the preliminary reading of 47.8, but firmly lower than the 49.6 reported in the previous month. The German reading of manufacturing PMI is due shortly after at 0855 BST.
For the wider eurozone area, manufacturing PMI, released at 0900 BST, is expected to remain steady at 51.9 in June.
The UK's reading of of manufacturing PMI, released at 0930 BST, is expected come in at 56.8. While this is slightly down from the 57.0 posted in May, the figure remains firmly in expansion territory.
Unemployment data from Germany, Italy, and the eurozone are released at 0855 BST, 0900 BST, and 1000 BST, respectively.
In the US, Treasury Secretary Jacob Lew gives a speech at 1300 BST. June's reading of Markit manufacturing PMI from the world's largest economy is scheduled for 1445 BST, with construction spending and ISM manufacturing PMI data released shortly after at 1500 BST.
In corporate news, FTSE 250-listed St Modwen Properties and Ocado Group have released half-yearly results ahead of the UK equity market open Tuesday.