LONDON (Alliance News) - UK stocks look set to open marginally higher Friday, amid positive sentiment from Thursday's report of a surge in UK retail sales and a strong reading of UK consumer sentiment overnight.
The final reading of fourth-quarter UK GDP is released at 0930 GMT.
A mixed night in Asian equities sees the Shanghai Composite down 0.2%, the Hang Seng up 1.2%, and the Nikkei up 0.5%, after a raft of Japanese data was released overnight.
Core Japanese inflation came in unchanged at 1.3% in February. Retail sales in Japan rose by 3.6% annual, putting them just behind the 3.7% annual growth in retail sales recorded in the UK on Thursday. Indeed, the annualised growth rate of UK retail sales last month outpaced that of China.
Thursday's strong UK retail sales report gave a boost to the pound and UK sentiment, sending sterling up to a high of USD1.6647. The pound continues to trade near to that level ahead of the open of equity markets Friday.
The positive sentiment has been maintained overnight by the UK Gfk consumer confidence index, which rose to -5 this month, marking its strongest reading since 2007.
Speadbetters are indicating that the FTSE 100 will open about 0.2% higher at 6,597.00.
The potential for China to launch some kind of economic stimulus also continues to keep equity buyers interested. The Chinese premier reportedly said Thursday that monetary tools should be used to lower the financing costs of enterprise.
"Chinese Premier Li Keqiang gave credence to the rumours of government stimulus that have been pushing world stock prices higher this week," said CMC Markets analyst Jasper Lawler.
The main economic focus Friday is the third and final reading of UK fourth-quarter GDP, due at 0930 GMT. Economists expect the fourth-quarter growth rate to remain unadjusted at 0.7%, and annual GDP in 2013 to be unchanged at 2.7%.
Following the final reading of US annual GDP at 2.6% on Thursday, this would confirm that not only are UK retail sales outpacing China's, but the economy as a whole is growing at a slightly faster pace than the world's largest.
"The question must arise of how much longer the Band of England can continue to just look on at these kinds of data, and of a matching/underlying housing boom in the traditional epic UK fashion, without being seen to be behind the curve," said Rabobank analyst Michael Every.
The eurozone economic sentiment indicator is expected to show a slight improvement over the last month at 1000 GMT, while later in the afternoon German consumer price inflation data is expected to slow slightly to 1.1% year-on-year in March, from 1.2% in February. On a monthly basis, CPI in Europe's largest economy is expected to slip to 0.4% in March, from 0.5% previously.
These falling prices in the eurozone are keeping pressure on the euro, which has been falling in recent sessions, as the theory that the European Central Bank may opt for further policy easing gains weight. Ahead of the equity market open, the euro is trading near to a monthly low against the dollar of USD1.3745.
US CPI data later in the afternoon is expected to show stable price growth of 1.1% year-on-year in February, with just 0.1% growth on a monthly basis.
Coming to the end of the UK corporate reporting season, there are no blue chip companies with scheduled releases in the calendar Friday. Johnston Press have published full-year results, along with Songbird Estates, Chesnara, and Optimal Payments, while QinetiQ Group has released a trading statement.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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