(Alliance News) - Stocks in London are set to open lower on Thursday, after another largely lower finish in New York, as investors continued to fret about the health of the US banking sector.

IG says futures indicate the FTSE 100 index of large-caps to open 19.34 points, or 0.2%, lower at 7,833.30. The index ended down 38.49 points, or 0.5%, at 7,852.64 on Wednesday.

Also likely to hold back early buying on Thursday are two key pieces of economic data from the US due in the London afternoon at 1330 BST: the weekly unemployment claims report and US GDP data.

Markets are expecting annual economic growth to slow to 2.0% in the first quarter of the year from 2.6% a quarter earlier.

"A negative surprise in US GDP could further boost the [US Federal Reserve] doves and pull the rate hike expectations lower," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

The Fed will announce its next interest rate decision on Wednesday next week.

Wall Street ended largely lower on Wednesday, with the Dow Jones Industrial Average down 0.7% and the S&P 500 down 0.4% but the Nasdaq Composite up 0.5%.

Technology stocks marched higher, following well-received earnings from Microsoft and Alphabet, while other blue-chips faltered as bank shares fell further, weighed down by fears of further turmoil in the sector.

Alphabet numbers were all well received, although the stock slipped back 0.1% after opening higher. Shares in Microsoft rose 7.2% after it reported increased revenue and earnings in its financial third quarter, boosted by solid growth in its cloud division.

Facebook-owner Meta Platforms, which reported after the closing bell on Wednesday, also posted positive earnings. Shares in the firm were up 12% in after-hours trade, as it reported better-than-expected revenue in the first quarter and issued positive guidance for the next three months.

Meanwhile, among US banks, Bank of America close down 1.4%, Wells Fargo down 2.7% and JPMorgan Chase down 1.8%.

This came as shares in First Republic slid a further 30% on Wednesday, after halving the day before, as regulators, big banks and potential bidders for its assets all held back from stepping in to help the embattled San Francisco lender.

"No one knows at this point what will happen to FRC, but we know that the FRC crisis gets investors to wonder whether the Federal Reserve will go ahead with next week's so-far-mostly-certain 25 basis point hike or not," said Ozkardeskaya.

The US dollar was soft against most major currencies on Thursday morning amid the concern around the US banking sector.

Sterling was quoted at USD1.2484 early Thursday, higher than USD1.2472 at the London equities close on Wednesday. The euro traded at USD1.1057, higher than USD1.1046 late Wednesday.

Against the yen, however, the dollar was quoted at JPY133.67, higher versus JPY133.54.

In Tokyo on Thursday, the Nikkei 225 index was flat.

In China, the Shanghai Composite was up 0.4%, while the Hang Seng index in Hong Kong was up 0.2%. The S&P/ASX 200 in Sydney closed down 0.5%.

Gold was quoted at USD1,999.58 an ounce early Thursday in London, higher than USD1,995.53 at the equities close on Wednesday. Brent oil was trading at USD77.93 a barrel, significantly lower than USD80.29 late Wednesday.

Stephen Innes, managing director at SPI Asset Management, said the oil complex was "dragged down by the possible negative economic impact of tighter lending standards in the wake of another hammering on the KBW Regional Banking Index".

"A pullback in credit could provide a massive recovery impediment to already slowing industrial and consumer activity that has been flashing warnings worldwide for months," he said.

In Thursday's UK corporate calendar, there are trading statements from AstraZeneca, Taylor Wimpey, Unilever and WPP.

By Heather Rydings, Alliance News senior economics reporter

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