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25 Mar 2021 | 07:36

London pre-open: Stocks seen lower ahead of vaccine summit

(Sharecast News) - London stocks were set to edge lower at the open on Thursday ahead of an EU vaccine summit. The FTSE 100 was called to open 10 points lower at 6,703.

CMC Markets analyst Michael Hewson said: "Tensions between the EU and UK still remain fairly elevated, despite efforts to cool the narrative, while the recent comments from Thierry Breton, the EU's internal market commissioner accusing the UK of vaccine nationalism still suggest the potential for a misstep, as feelings continue to run high, particularly on the EU side, where the sense of grievance remains especially elevated.

"There is by no means unanimity amongst EU member states about the stance being taken by the EU Commission with the likes of Ireland expressing concern about the damage such actions might do to the EU's reputation, and that's even before the damage it might do to the EU's own attempts to kick start its own faltering vaccination program, at a time when infection rates are rising again sharply.

"Sentiment in Europe continues to remain fragile after German Chancellor Angela Merkel was forced into a sharp U-turn over her decision to announce a full 5 day lockdown over the Easter period, as the German government's response to their rising crisis shows further signs of coming apart at the seams."

In UK corporate news, Compass said profitability improved in the second quarter while volumes stayed subdued because of the Covid-19 crisis. The catering company's organic revenue fell 28% in the three months to the end of March from a year earlier compared with a 33.7% drop the previous quarter. In both the first and the second quarter organic revenue was 71% of 2019 levels.

Compass said revenue fell less sharply in the second quarter as it began to lap the Covid-19 impact on the previous year's income. Operating margin is expected to strengthen to about 4% in the second quarter from 2.7% in the first quarter.

Cineworld swung to a huge loss as the movie house chain felt the full impact of closures during the Covid-19 pandemic and warned any tightening of restrictions would force it to raise extra cash.

The company reported a pre-tax loss of £3bn, compared with a profit of $212m a year earlier as revenue collapsed to $852m from $4.3bn in 2019. Cineworld earlier this week said it planned to re-open US cinemas on April 2.

"There can be no certainty as to the future impact of Covid-19 on the group. Governments strengthening of restrictions on social gathering may lead to closure of cinemas or studios delaying movie releases. This would have a negative impact on the Group's financial performance and likely require the need to raise additional liquidity," Cineworld said.

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