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London pre-open: Small drop expected ahead of unemployment data

- Small decline expected in early trade
– All eyes on unemployment
– BBA Aviation Chairman to step down

City sources predict the FTSE 100 will open around four points lower than yesterday’s close of 6,549.11, as investors seek direction after US stocks slipped last night and ahead of the release of UK jobless claims and the unemployment rate.

Tuesday saw the S&P 500 snap a four-day winning streak as hopes over a solution to the debt ceiling and ongoing government shutdown began to fade. The emerging House proposal to suspend the borrowing limit until February and fund the government through to January was rejected by Senate Majority Leader Harry Reid.

Meanwhile, back on this side of the Atlantic, economists predict unemployment claims will fall by 25,000 in September, compared to a drop of 32,600 the month before. Employers added 125,000 jobs in August, down from 80,000 a month earlier, according to consensus.

The jobless rate is expected to hold steady at 7.7% for August.

Policymakers are turning to jobs data after the Bank of England (BoE) vowed to maintain interest rates at the current low of 0.5% until the unemployment rate falls below 7%.

BoE Governor Mark Carney believes it will take about three years for unemployment to reach the Bank’s target.

In company news, Galliford Try has been appointed as the preferred delivery partner by South West Scotland for the construction of two new school campuses. The deal, which is worth up to £49.7m, was awarded to the house-building and construction group’s Scottish business, Morrison Construction.

Michael Harper, the Non-Executive Chairman of BBA Aviation, is to step down from the board next year.

Engineering group IMI’s third-quarter results were in line with expectations with revenue 3% ahead of last year. The company said it will deliver full-year results in line with current market forecasts.


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