London pre-open: Strong start expected after Obama 'fiscal cliff' offer



LONDON (ShareCast) - London's benchmark index is expected to open strongly on Tuesday morning as 'fiscal cliff' talks in the US look to be gaining some speed.

Market analyst Craig Erlam from Alpari said: "European stock markets are expected to open higher this morning after fiscal cliff negotiations took a big step forwards. Last night Barack Obama finally made his first serious counter-offer to the House Speaker John Boehner."

Obama has reportedly proposed raising taxes for those that earn over $400,000, a higher threshold than the $250,000 annual salary he had previously targeted. Boehner's proposal at the weekend offered to raise taxes on those earnings over $1m in exchange for cuts to entitlement spending.

"There was still an element of caution in the markets following Boehner's offer as both parties have to be willing to negotiate for these talks to go anywhere. Now (Other OTC: NWPN - news) that we've seen this counter-offer from Obama, the chances of a deal by the end of the year appears to have increased significantly, hence the extremely positive reaction in the markets," Erlam said.
City sources predict the FTSE 100 (FTSE: ^FTSE - news) will open up 22 points from yesterday's close of 5,912.
Stocks to watch

Oilfield services giant Petrofac has reiterated its target of achieving net profit growth of at least 15 per cent this year, saying that operations continue to perform in line with expectations.

The group, which said in October that it had seen "high levels of bidding activity" going into the fourth quarter, said that it now expects the group backlog to be around $11.6bn by the end of 2012, up from $9.4bn at the end of the third quarter (September 30th), and $10.8bn at the end of 2011.

Precious metals group Polymetal is to buy up the Svetlobor platinum exploration project in the Sverdlovsk region of Russia through two transactions, the company announced on Tuesday morning.

The company said that the acquisitions gives it meaningful exposure to platinum, "a precious metal with limited production outside South Africa and Zimbabwe, countries which face a material risk of significant supply disruptions"

Ground engineering specialist Keller said overall market and trading conditions have remained stable since mid November (Xetra: A0Z24E - news) and it remains on track to meet full year guidance.

In its interim statement in November the group said 2012 full-year revenue was expected to be around £1.3bn, with full-year profit before tax significantly above the then range of market expectations.