UK Stocks — Factors to watch on April 5

LONDON, April 5 (Reuters) – Britain’s FTSE 100 (.FTSE: Quote, Profile, Research) is seen little
changed at the open on Tuesday, with rising commodity prices seen putting
pressure on demand and technical factors suggesting that the recent rally looks
to have run out of steam for now.

The blue-chip index is seen opening flat to four points lower after it added
7.06 points or 0.1 percent to close at 6,016.98 points on Monday, its eighth
gain in nine sessions.

Oil prices hovered near their highest levels since 2008 on Tuesday, with
Brent (LCOc1: Quote, Profile, Research) near $121 a barrel, as unrest in the Middle East and North Africa
supported prices and on delays to elections in Nigeria, while silver (XAG=: Quote, Profile, Research) hit
its highest since early 1980.

Rising commodity prices are seen as making it tough for companies to
maintain profit margins which are at relatively high levels, investors said,
while technical factors will also likely limit further strength in the near
future.

“The FTSE attempted another breakout to the upside on Monday before buying
pressure dried up. Profit-taking drove the index back toward the psychological
6000 level before late session buying pushed the market slightly better for the
day,” Enis Mehmet, analyst at Autochartist said.

“This trading action suggests that the index may be overbought on a
short-term basis. Traders appear to be reluctant to buy strength, suggesting
that perhaps a sizeable correction may be necessary to attract fresh money.”

Britain’s economy edged back to growth in the first quarter after a surprise
contraction late last year, although the recovery was fragile and manufacturers’
confidence in the outlook has fallen sharply, a survey from the British Chambers
of Commerce showed. [ID:nL9E7EE008]

British services PMI data for March will be watched at 0828 GMT for more
clues on the outlook for the struggling UK economy.

Business activity is forecast at 52.5, hardly changed from 52.6 the previous
month. That would support the view that Britain’s economy returned to growth in
the first quarter of this year after a surprise contraction at the end of 2010.

GLOBAL MRKTS-Euro edges off 5-mth high; Brent above $121 [ID:nL3E7F503L]

S&P closes flat, fails to break through resistance [ID:nN04140958]

Nikkei falls as rebound stalls, TEPCO hits record low [ID:nL3E7F5078]

Crude dips from 2-1/2 year top; supply concerns persist [ID:nL3E7F503Z]

TREASURIES-View Fed will stay the course boosts bonds [ID:nN04286087]

Copper up, Bernanke cools inflation fears [ID:nL3E7F509E]

PRECIOUS-Silver hits 31-yr top, iShares Silver at record [ID:nL3E7F503K]

UK stocks to watch on Tuesday are:

BP (BP.L: Quote, Profile, Research)

The oil major has submitted one application for a drilling permit since the
Obama administration lifted its deepwater-drilling ban, but it has reached no
deal with the government on resuming activity in the Gulf, a company source said
on Monday. [ID:nWNA5380]

RIO TINTO (RIO.L: Quote, Profile, Research)

The miner’s energy chief executive Doug Ritchie, said on Tuesday the company
is very pleased with the level of acceptances on its $4 billion bid for rival
Riversdale Mining (RIV.AX: Quote, Profile, Research) and would not alter the fundamental terms of the
offer. [ID:nWNAS1699]

LONDON STOCK EXCHANGE (LSE.L: Quote, Profile, Research)

Malaysia’s stock exchange operator, Bursa Malaysia (BMYS.KL: Quote, Profile, Research), is in early
talks to strike a partnership with the London Stock Exchange to trade each
other’s shares, The Star newspaper reported on Tuesday. [ID:nL3E7F503U]

HOME RETAIL (HOME.L: Quote, Profile, Research)

The retail group rallied on Monday on news that Chicago-based private equity
firm Madison Dearborn Partners has bought a 4 percent stake, the Daily Mail
market report said.

BANKS

A task force of Britain’s major banks have launched a campaign to make
lending to small and medium-sized businesses more transparent, the British
Bankers Association (BBA) said on Tuesday. [nLDE73327P]

BRITISH AMERICAN TOBACCO (BATS.L: Quote, Profile, Research)

The tobacco company is setting up a business to commercialise non-tobacco
nicotine products that could help wean smokers off its cigarettes, the Financial
Times said.

ENQUEST (ENQ.L: Quote, Profile, Research)

The North Sea-focused oil firm releases its full-year results.

TODAY’S UK PAPERS

> Financial Times [PRESS/FT]

> Other business headlines [PRESS/GB]

(Reporting by Simon Falush)

UK Stocks — Factors to watch on April 5