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London pre-open: Stocks seen muted as pound falls on Brexit woes

By Michele Maatouk

Date: Thursday 17 Oct 2019

London pre-open: Stocks seen muted as pound falls on Brexit woes

(Sharecast News) - London stocks were set for a muted open on Thursday as sterling fell on reports that Northern Ireland's Democratic Unionist Party has said it cannot support the customs terms in Prime Minister Boris Johnson's Brexit deal.
The FTSE 100 was called to open unchanged at 7,168. Meanwhile, the pound was down 0.6% against the dollar and the euro at 1.2758 and 1.1523, respectively, as it emerged that the DUP won't support the customs terms as they stand.

The DUP was understood to have said that it will continue to work with the government to try to get a "sensible" deal.

Boris Johnson was set to attend a summit of EU leaders in Brussels later in the day as he scrambles to get backing from the DUP and the rest of parliament for his deal.

CMC Markets analyst Michael Hewson said: "Let's not forget that the last deal was voted down on three occasions, while other indicative votes also didn't bring forward any other positions that generated a consensus either.

"The problem now is that MPs having complained bitterly about the prospect of a no-deal Brexit could find themselves voting down a deal that they themselves went to court to force the government into delivering. If they were to do this having complained about being cut out of the process in the first place, they would be merely confirming to UK voters that they, far from looking to draw a line under this stage of the Brexit process, were merely intent on preventing it altogether.

"They certainly might take a dim view of opposing MPs who choose to oppose the deal for the sake of it, or on the basis that they didn't negotiate it. With an election in the offing at some point in the next few months the voters' verdict could well be brutal."

On the data front, retail sales figures for September are due at 0930 BST.

In corporate news, BHP said it would make a final investment decision on the massive $17bn Canadian potash project in 2021.The world's biggest miner launched the project in 2013 to diversify activities and on Thursday approved a further $345m on preparation spending. BHP also reported a 1% year-on-year fall in third quarter iron ore output to 69m tonnes as it maintained its annual production forecast of 273m - 286m tonnes.

Domino's Pizza Group said it will leave its international markets following a strategic review and a disappointing third quarter performance, which saw sales decline in Switzerland, Norway and Iceland. Meanwhile, sales in the UK and Republic of Ireland increased by 4% despite challenging conditions and the impact of a franchisee dispute, which the takeaway pizza giant said will likely continue into 2020.

Grafton Group updated the market on its third quarter trading following the sale of Plumbase and its Belgian operations on Thursday, reporting that like-for-like group revenue from continuing operations was ahead 0.9%, and total revenue up 4.5% for the three months ended 30 September. The FTSE 250 company said that, following an "encouraging" start, trading towards the end of the quarter and more recently was impacted by a softening in activity.

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