FTSE to zero in on Shell strategy

An eagerly awaited strategy update from Shell will provide the main talking point for British equity investors this week as the oil major seeks to repair its reputation in the wake of a reserves scandal.
Analysts said that any clarity on planned asset disposals, expected changes in Shell's governance structure and details of how the company plans to achieve its reserve replacement targets will likely support the share price.
But some market watchers were sceptical that the company will address all these issues at Wednesday's presentation.
"Is Shell going to go through a major restructuring of its corporate culture? I doubt it," said Jim Wood-Smith, equity analyst at brokers Gerrard.
Elsewhere on the corporate agenda first-half results from Britain's number one supermarket chain, Tesco, will be closely watched, as will full-year results from defence firm Smiths Group, plumbing and heating equipment supplier Wolseley and football club Manchester United.
But the wider market looks set to remain in its recent trading range, analysts said, as oil prices remain stubbornly above $40, posing a threat to company earnings, and as spending by companies appears to flag.
"Certain reports suggest that capital expenditure dried up in the second half (of the year) having started quite well in the first," said Peter Bodycombe, a fund manager at Singer & Friedlander Investment Management.
"All that time it doesn't deliver we are relying more and more on a strung-out consumer both in the UK and the United States."
By 1100 GMT the FTSE 100 share index was up 31.9 points, or 0.7 percent, at 4,588.4. The benchmark index has risen about 5 percent in the past month.
Singer & Friedlander's Bodycombe said the market was unlikely to make significant progress until the US presidential election is over.
The impact of which way the presidential election goes and with what degree of certainty has implications for a number of key global sectors, such as pharmaceuticals, he said.
But strategists at Smith Barney, the research arm of US bank Citigroup said stocks across Europe were less in thrall of outside influences.
"We think that bottom-up factors (e.g. buybacks, dividends, profit warnings) will be more important in driving share prices than macro factors over the next six months," they said.
Large-cap stocks, including drugmaker AstraZeneca, Shell and Vodafone have all been buying back their own shares.