European markets were mixed in early trading on Thursday with the FTSE 100 pulling back from a run of four days higher on the trot while shares on the continent edged out small gains.

Worried British investors have half an eye on Brussels. PM David Cameron’s level of accomplishment in negotiating a better deal for the UK in Europe with 28 of his European counterparts could have a strong bearing on the direction of UK asset prices.

Gilt yields are slightly lower while the British pound rests near two week lows as European Council President Donald Tusk warned a deal was not yet certain. Consensus in markets is that with unemployment at near 5%, wages growing and consumer confidence relatively high, the British people won’t want to rock the boat by voting to leave the EU. But if Mr Cameron’s deal is perceived to be weak, it will pose a distinct risk to this view and could and to uncertainty in the lead-up to the referendum.

Oil prices slipped back after spiking on Wednesday amidst a meeting between Iran and some of its fellow oil producing nations over a freeze in output. Further gains in oil might have been more forthcoming had Iran actually agreed to an output freeze itself, even at some higher future level of production. US oil inventories are reported a day late following the US holiday. Another weekly draw in US inventories would add to the case for a bottom in oil.

Rolls Royce topped the FTSE 100 after it was reported the British engineering giant might give activist US hedge fund ValueAct a seat on its board following multiple profit-warnings. British Gas-owner Centrica was a top riser on the UK benchmark following well-received earnings. Yesterday’s biggest riser Glencore was one of the day’s biggest fallers as commodity prices dipped.

US stocks look set for a weaker start following yesterday’s release of FOMC minutes which confirmed a greater sense of concern amongst policymakers over the impact of ‘tighter financial conditions’ on the health of the US economy.


USA pre-opening levels

S&P 500: 3 points lower at 1,923

Dow Jones: 12 points lower at 16,441

Nasdaq 100: 5 points lower at 4,194


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