22 August 2005, 10:30   London shares outlook -- lower on uninspiring Wall St; oil price, drugs in focus

Leading shares are tipped to start the session lower, with little in the way of corporate news to shake off an uninspiring end to the week on Wall Street and as oil prices remain stubbornly high, dealers said. CMC Group is indicating the FTSE 100 will open 6 points down at around 5,307, after closing 43.3 points firmer at 5,312.6 on Friday. In New York, shares closed for the weekend mixed with sentiment hit by news a Texas jury found drug giant Merck liable in the sudden cardiac death of a man who had used the company's recalled pain killer Vioxx. The decision sets what could be a damaging precedent for the drug company which faces thousands more lawsuits over its former blockbuster drug. The DJIA closed up 4 points at 10,559, but well off earlier highs, with the Nasdaq down 0.52 at 2,135.56 and the S&P 0.74 firmer at 1,219.76. Over in Asia, the Nikkei 225 ended the morning session up 98.93 points at 12,390.66, while the Hang Seng was 44.15 higher at 15,082.76 at midday. Still in Asia, oil prices eased slightly after a sharp spike on Friday, albeit still above 65 usd, as Ecuador, the fifth largest crude producer in South America, declared an end to six days of civil unrest that had cut its exports. Back in London, in a quiet week for economic news, the first revision to second quarter GDP on Friday will take centre stage, as investors look to see if recent signs of an economic pick-up lift up the rate of growth. Most analysts expect the reading to be unchanged, although a number think quarterly growth may edge up 0.1 percentage point to 0.5 pct. In equities, with a dearth of earnings news penciled in for today, investors will turn, as always, to the weekend press for some direction. In the aftermath of the Merck court case, UK drug companies will themselves come under scrutiny, after The Times this morning said GlaxoSmithKline's anti-depressant drug Seroxat has been linked to a seven-fold increase in suicide attempts. The paper said an analysis carried out by Oslo University on Seroxat involving more than 1,500 patients found seven suicide attempts among those taking the drug and only one among those taking a placebo. British Airways will continue to come under the spotlight on reports Gate Gourmet, the catering firm at the centre of recent wild-cat strikes, will appoint administrators to its UK operations this week.

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