(Alliance News) - Stocks in London are set to open higher on Wednesday, despite tepid inflation data from China doing little to soothe fears about the pace of the world's second-largest economy's post-Covid bounce.

IG says futures indicate the FTSE 100 to open up 32.98, or 0.4%, 7, 560.4 on Wednesday. The index of London large-caps closed down 27.07 points, or 0.4% at 7,527.42 on Tuesday.

In Asia on Wednesday, the Nikkei 225 index in Tokyo was down 0.4%. In China, the Shanghai Composite was down 0.6%, while the Hang Seng index in Hong Kong was down 0.4%. The S&P/ASX 200 in Sydney was up 0.4%.

China slipped into deflation as consumer prices contracted last month for the first time in more than two years, official data showed, as slowing domestic spending weighs on the country's post-Covid economic recovery.

The consumer price index, the main gauge of inflation, fell 0.3% in July, the National Bureau of Statistics said, having flatlined in June. Analysts polled by Bloomberg had anticipated a 0.4% decline in the index for July.

Prices rose 0.2% month-on-month in July, having fallen 0.2% in June from May.

It is the second round of disappointing data for the Chinese economy this week.

Last month, China suffered its biggest drop in exports for more than two years, data on Tuesday showed. Sales of Chinese products to foreign markets plunged 14.5% on-year in July, a third consecutive drop, according to the customs authority.

The decline was bigger than expected and the heaviest drop since the start of 2020, when the economy came to a standstill in the early weeks of the Covid-19 pandemic.

On Thursday, there will be inflation data from the US. According to FXStreet-cited consensus, the headline annual inflation rate in the US is expected to pick up to 3.3% in July, from 3.0% in June.

Sterling was quoted at USD1.2763 early Wednesday, higher than USD1.2718 at the London equities close on Tuesday.

The euro traded at USD1.0974 early Wednesday, higher than USD1.0947 late Tuesday. Against the yen, the dollar was quoted at JPY143.15, lower versus JPY143.29.

In the US on Tuesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.5%, the S&P 500 down 0.4% and the Nasdaq Composite down 0.8%.

Gold was quoted at USD1,931.03 an ounce early Wednesday, higher than USD1,925.90 on Tuesday. Brent oil was trading at USD85.90 a barrel early Wednesday, higher than USD84.92 late Tuesday.

In the UK corporate calendar on Wednesday, there are half-year results from Flutter Entertainment, Hill & Smith and Coca-Cola HBC.

In the economic calendar on Wednesday, there is industrial production and turnover data from Ireland at 1100 BST.

By Sophie Rose, Alliance News reporter

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