London pre-open: Stocks to dip as Brent stays above $100 a barrel; UK economy stagnates

London stocks were set to dip at the open on Friday as Brent crude remained above $100 a barrel and as the latest UK GDP figures showed the economy stagnated in January.

The FTSE 100 was called to open down around 0.1%.

Ipek Ozkardeskaya, senior analyst at Swissquote, said: "We’re coming toward the end of the second trading week since the US-Israel joint attack on Iran caused major damage to both sides’ oil facilities and disrupted trade through the Strait of Hormuz - where around 20% of global oil flows transit. Oil prices have been wavering up and down on the news ever since.

"Several measures have been proposed to ease the oil rally: countries within the International Energy Agency said they would release a record amount of oil from their reserves; the US said it would insure and escort ships through the Strait of Hormuz; and Washington temporarily scrapped a century-old maritime law requiring American-built ships to transport goods between US ports, allowing foreign vessels to step in.

"More surprisingly, the US announced earlier this week that it would tolerate continued purchases of Russian oil by India to help ease pressure on global oil prices. Yesterday, officials went even further by signalling broader flexibility around Russian oil flows.

"So far, these efforts have been largely in vain. The strikes in the Middle East, damage to regional oil facilities and the closure of the Strait of Hormuz - with Iran possibly laying mines to prevent ships from passing - continue to keep upside pressure on oil prices tight."

On home shores, data from the Office for National Statistics showed no economic growth in the UK in January, missing forecasts for modest expansion. GDP was 0.0%, down on December’s 0.1% uptick and below expectations for growth of 0.2%.

While construction improved by 0.2% during the month, the dominant services sector showed zero growth while production fell 0.1%.

In the three months to January, GDP was 0.2%, missing forecasts for a 0.3% uplift.

ONS director of economic statistics Liz McKeown said: "Growth ticked up slightly in the latest three months, partly reflecting the recovery of car manufacturing, following the cyber incident in the autumn.

"Within services, which also increased, wholesale continued to rebound from a weak summer.

"However, the overall picture remains subdued, with no growth in the latest month.

"There was another large fall in the construction industry in the latest three months, with continued contraction in housebuilding."

Corporate news was scarce, but property developer Berkeley Group reaffirmed annual guidance of £450m in pre-tax profit but warned the war on Iran was "weighing heavily" on risk sentiment.

In a trading update for the four months to 28 February, the company said demand had remained constrained by the impact on consumer confidence of geopolitical events and macroeconomic uncertainty, although sales enquiries "remain good and the value of underlying reservations has been recovering towards the levels seen over the summer prior to the pre-Budget hiatus".

"While reaffirming guidance, we are aware of the risk of a further deterioration in macro conditions with the potential for higher inflation in the near term and for interest rates to remain higher for longer," Berkeley said.