London pre-open: Stocks to rise as banking sector worries ease

(Sharecast News) - London stocks were set to rise at the open on Tuesday as worries about the banking sector continued to ease. The FTSE 100 was called to open 30 points higher at 7,501.

CMC Markets analyst Michael Hewson said: "After the big sell-off at the end of last week, European markets started the week in a positive fashion as the banking sector angst of the last few days eased slightly.

"Most sectors of the markets saw a modest rebound, helped by events on the other side of the Atlantic as reports emerged that Citizens Bank in the US had agreed on a deal to acquire Silicon Valley Bank's loans and deposits book.

"Yesterday's more positive tone looks set to carry into today's European market open with a modestly higher open."

Investors will be mulling industry data showing that food prices continued to soar in March, pushing shop price inflation higher.

According to the BRC-NielsenIQ Shop Price Index, annual shop price inflation hit a new high of 8.9% in March, from 8.4% in February.

Within that, non-food inflation was 5.9% compared to 5.3% a month earlier, while food inflation surged to 15% from 14.5% in February. It is the highest food inflation rate on record.

Fresh food inflation also hit a new high, rising to 17% from 16.3% a month earlier, while ambient food inflation rose to 12.4% from 12%.

Helen Dickinson, chief executive of the British Retail Consortium, warned: "Shop price inflation has yet to peak. As Easter approaches, the rising cost of sugar coupled with high manufacturing costs left some customers with a sour taste, as price rises for chocolate, sweets and fizzy drinks increased in March.

"Fruit and vegetables also rose as poor harvests in Europe and North Africa worsened availability, and imports became more expensive due to the weakening pound.

"Food price rises will likely ease in the coming months, particularly as we enter the UK growing season, but wider inflation is expected to remain high."

Mike Watkins, head of retailer and business insight at NielsenIQ, added: "Inflation continues to have an impact on the spending power of shoppers, and increased energy bills from April will add more pressure. Since food prices have risen, retailers have seen more visits but less basket spend, as shoppers manager their weekly food bills by shopping little and more often and seeking out the lowest prices."

In corporate news, Ocado Retail reported a jump in first quarter revenues and said it remained on track to return to sales growth and profitability.

The online grocer - a 50:50 joint venture between Ocado Group and Marks & Spencer - said retail revenues rose 3.4% in the 13 weeks to 26 February, to £583.7m, with average orders per week ahead 3.6% year-on-year at 381,000. The average basket size fell by 7.5% to 45 items. However, that was offset by an 8.3% rise in the average selling price to £2.75. The average basket value nudged up 0.2% to £124.

Halma said it had bought FirePro, a manufacturer of aerosol-based fire suppression systems, for €150m (£132m) on a cash- and debt-free basis.

FirePro's unaudited revenue for the 12 months to December 31 was €23.3m, with return on sales more than double Halma's target range of 18-22%. The Cyprus-based company will operate as a standalone group within Halma's Safety sector and continue to be led by its current management team.