20th Jan 2015 07:43
LONDON (Alliance News) - London markets are forecast to tick higher Tuesday, lifted by better-than-expected economic growth in China, even as the International Monetary Fund cut its global growth forecast.
The FTSE 100 is forecast to open 31 points higher at 6,616, up from Monday's close of 6,585.53.
The International Monetary Fund downgraded its global growth outlook as positive effects of lower oil prices and the depreciation of the euro and yen are being more than offset by persistent negative forces.
In its World Economic Outlook Update released Tuesday, the Washington-based lender said the global economy is set to grow 3.5% this year, down from the prior forecast of 3.8%. For 2016, growth is projected to be at 3.7% instead of 4%.
In China, the country's economy grew at the weakest pace since early 2009 in the fourth quarter, though the growth was more than the consensus estimate, data from the National Bureau of Statistics reported Tuesday.
Gross domestic product grew 7.3% in the fourth quarter from a year ago, the same rate as in the third quarter, marking the weakest growth since the first quarter of 2009. However, the growth was stronger than the 7.2% rise forecast by economists.
"Today's data suggest that although slowing investment has continued to put downward pressure on growth, this has been offset by a pick-up in consumption and service sector activity," Julian Evans-Pritchard, China economist at Capital Economics, says.
The news lifted Asian markets, and Japan's Nikkei closed up 2.1% at 17,366.3. The Hang Seng in Hong Kong is up 0.7% at 23,914.34, and the Shanghai Composite ended 1.8% higher at 3,173.052.
Brent crude is quoted at around USD48.55 a barrel Tuesday, up from last week's low of USD45.16. US benchmark West Texas Intermediate is quoted at USD47.76 a barrel.
German producer prices fell more than expected in December, dropping 0.7% on the month and 1.7% on the year, adding weight to the expectation that the European Central Bank will broaden its economic stimulus measures when governors meet on Thursday for the first policy meeting of the new year.
The country's ZEW sentiment survey for January is due at 1000 GMT.
In corporate news, consumer goods giant Unilever reported a 2.7% drop in sales in 2014 to GBP48.44 billion and said it doesn't expect market conditions to improve in 2015.
Online trader IG Group said net trading revenue rose 8% to GBP197.4 million in the six months to November 30. It reiterated that full-year profit will be hit by as much as GBP30 million after the Swiss National Bank dropped its exchange rate peg last week, causing extreme market volatility. Of that, GBP12 million is IG's own market exposure, the rest that of its clients, which it may or may not be able to collect.
Bookmaker William Hill said full-year revenue rose 8% despite a 2% drop in the final quarter of the year.
In a production report, Rio Tinto said its global iron ore shipments rose 17% to 302.6 million tonnes in the fourth quarter of 2014, while total production hit 295.4 million tonnes, up 11% year-on-year.
By Ian Edmondson; [email protected]
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