UK stocks will trade in thrall to global oil prices this week after a spike in crude futures brought high energy costs back to the fore before a break in the corporate news calendar, strategists said.
"If the oil price goes down, the FTSE will go up. If the oil price goes up, the FTSE will go down," said Andrew Bell, strategist at Carr Sheppards Crossthwaite.
Top of the corporate agenda is Monday's investor day at mobile phone group Vodafone Group, which is trying to shake complaints of low visibility. Its executives will make extensive presentations and may outline some cost cuts. But analysts said it could be a "shop window" that was unlikely to add fresh impulse to its shares.
For the broader market, oil prices are a threat to profitability and growth for firms ranging from British Airways to Dulux paint maker ICI.
Oil tipped the FTSE-100 share index off a two-year high this week when crude futures neared an August record of nearly $50 because of supply hitches after Hurricane Ivan.
But London is expected to outperform other Western stock markets in the face of potential jolts on the economic front. The other big market concern, rising interest rates, has faded as Britain is near the end of a rate-tightening cycle, Bell said.
"The behaviour of the market suggests there aren't a lot of sellers around," he said.
A Reuters poll of economists predicted the Bank of England would raise rates for the last time in this cycle in November. US policymakers are expected to be more aggressive.
This week's economic focus will be on September purchasing managers' data due out in Britain and the United States next Friday. In Britain, economists are hoping for a bounce after the indexes for orders and output fell sharply in August.
The market may also glean clues to the direction of the global economy from a meeting of finance chiefs from the Group of Seven leading industrialised nations in Washington.
China, a massive source of new demand for London's mining and energy companies, has been invited for the first time.
A flood of trading statements is due from media firms, including Capital Radio on Monday, Emap on Tuesday and GWR on Thursday.
Radio stocks have seen fresh interest after Capital and GWR announced an all-share merger last weekend.
Bridgewell Securities media analyst Patrick Yau said potential spinoffs by those companies before their merger might spawn take-over activity by smaller players.
The trading statements are expected to confirm growth hopes, a welcome change after a spate of profit warnings from FTSE 100 companies such as Unilever.
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