London pre-open: FTSE to make gains despite downgrade



LONDON (ShareCast) - City sources predict the FTSE 100 (FTSE: ^FTSE - news) will open up 22 points from Friday's close of 6,336, despite the news that ratings agency Moody's has stripped the UK of its AAA rating and said the growth outlook in the medium term will remain weak.

The economy, which hasn't suffered a downgrade in over 30 years, is now rated at AA1.

Standard and Poor and Fitch both continue to rate the UK as AAA.

Over in the US, the main equity indices ended last week on a high note as Federal Reserve Chairman Ben Bernanke eased concerns over stimulus measures. Bernanke reportedly brushed off fears the central bank's easy policy would create economically-risky asset bubbles at a closed meeting in February with the Treasury Borrowing Advisory Committee.

It signalled Bernanke will likely announce the Fed is committed to its third round of quantitative easing. Markets reacted positively to the news as stocks rebounded from the worst slump since November (Xetra: A0Z24E - news) .

Over in Italy, polling stations are set to close at 3pm, with the initial results expected to follow within a matter of hours.

In UK company news, African Barrick Gold (LSE: ABG.L - news) has unveiled Kelvin Dushnisky as its new Chairman with immediate effect, replacing Acting Chairman Derek Pannell, who has decided not to run for re-election in April in order to concentrate on other commitments. Dushnisky joined the board in June last year and is currently Senior Executive Vice President of Barrick Gold Corp. He had more than 25 years of experience in broad-ranging roles across the mining industry, the group said.

The Food and Drug Administration (FDA) has given the green light for two drug manufacturers to produce a generic version of Reckitt Benckiser (LSE: RB.L - news) 's SUBOXONE tablets in the US, dealing a big blow to the consumer products giant. Reckitt announced on Monday morning that two unnamed manufacturers had received approval to make the drug, which is used in the treatment for the chronic diseases of addiction.

Rolls-Royce, the global power systems company, has been awarded a $40m contract to supply equipment and related services to power the flow of natural gas through the Uzbekistan section of the Turkmenistan-China natural gas (Other OTC: CHNG - news) pipeline.

Primark owner and sugar group Associated British Foods (LSE: ABF.L - news) said interim results will be ahead of company expectations at the start of the year. The owner of AB Sugar said adjusted operating profit will be higher than last year after a strong performance from Primark. However, profit from sugar in the first half will be lower than last year after unusually low sales volumes in China last year.