London open: Markets cautious as debt crisis rages on

20th Sep 2011 08:34

It was a flat start in London, as investors remained concerns with the escalating debt crisis in the Eurozone.In a fresh blow to the debt-stricken area, ratings agency Standard & Poor's (S&P) downgraded its rating on Italian sovereign debt by one notch on Monday night, citing poor economic growth and a "fragile governing coalition". While still considered investment grade debt, the rating was cut from A+ to A, five levels above junk. S&P has maintained its outlook as negative, a stance it has taken since May.In regards to Greece, the finance minster said yesterday that the embattled Eurozone nation will unveil further spending cuts as it seeks to comply with conditions imposed by international creditors. However, comments from a Bank of America Merrill Lynch economist are sure to weigh on sentiment, as she suggested that a Greek default could push the US back into a recession. "Due to financial trading relationships and off-balance sheet exposure to European banks, the US banking system will not go unscathed," Michelle Meyer said. "If the crisis in Europe escalates, it could be the shock that pushes the US economy into recession."Meanwhile, Britain's business secretary Vince Cable has warned that the UK could face years of subdued growth "in the economic equivalent of war [...] The financial crisis is still with us. It never went away," he said. "The truth is that there are difficult times ahead, Britain's post-war pattern of ever rising living standards has been broken by the financial collapse."Mining colossus Rio Tinto was in demand after increasing its copper mineral resources at its wholly-owned Kennecott Utah Copper Bingham Canyon Mine in the USA.Iconic British luxury brand Burberry was among the high risers in the opening minutes, making gains a day after its catwalk show at London Fashion Week.Department store group Debenhams rose after saying it expects full-year profits to surpass consensus estimates, after a strong end to the year.Bio degradable plastics firm Symphony Environmental plummeted as gross profits fell from £2.3m to £2.18m.Mobile gaming firm Probability was in demand after bookmaker William Hill said that an offer it would make for the company would be in cash.Russia-focused oil and gas firm PetroNeft Resources fell lower despite announcing a maiden profit in the first half of 2011.Manoj Ladwa, senior trader at ETX Capital, said markets were acting fairly robustly across most asset classes despite the increasingly negative news flow, suggesting traders "are yet to switch into full risk-off mode". "Within the first hour of trading, equities have moved into the black having started off the day in negative territory, as investors opt for stocks with more defensive qualities - but any rally could be short-lived as the market waits in anticipation for the Federal Reserve to show its hand," he said."While the market is not expecting another round of quantitative easing, if the Fed fails to implement measures to further stimulate the US economy, asset prices could retreat fairly sharply," Ladwa saidBCFTSE 100 - RisersBAE Systems (BA.) 285.30p +1.89%Burberry Group (BRBY) 1,470.00p +1.38%GlaxoSmithKline (GSK) 1,320.00p +1.15%Inmarsat (ISAT) 505.00p +0.70%AstraZeneca (AZN) 2,816.00p +0.66%Wood Group (John) (WG.) 556.50p +0.63%Kazakhmys (KAZ) 983.00p +0.61%Vodafone Group (VOD) 162.05p +0.56%Royal Bank of Scotland Group (RBS) 22.99p +0.48%Scottish & Southern Energy (SSE) 1,293.00p +0.47%FTSE 100 - FallersCompass Group (CPG) 545.50p -1.36%SABMiller (SAB) 2,166.00p -1.10%BT Group (BT.A) 169.20p -0.99%Eurasian Natural Resources Corp. (ENRC) 639.50p -0.93%Whitbread (WTB) 1,595.00p -0.87%Capita Group (CPI) 719.50p -0.76%InterContinental Hotels Group (IHG) 1,054.00p -0.75%Cairn Energy (CNE) 284.00p -0.73%GKN (GKN) 188.00p -0.69%Vedanta Resources (VED) 1,320.00p -0.60%FTSE 250 - RisersDebenhams (DEB) 61.65p +3.96%Laird (LRD) 148.60p +2.84%Barratt Developments (BDEV) 79.85p +2.70%Bwin.party Digital Entertainment (BPTY) 128.20p +2.56%St. Modwen Properties (SMP) 135.00p +2.27%Go-Ahead Group (GOG) 1,464.00p +1.53%BTG (BGC) 271.50p +1.50%De La Rue (DLAR) 789.50p +1.41%Keller Group (KLR) 356.75p +1.21%Redrow (RDW) 107.70p +1.13%FTSE 250 - FallersDaejan Holdings (DJAN) 2,339.00p -4.73%International Personal Finance (IPF) 216.00p -3.10%Computacenter (CCC) 379.70p -2.14%Daily Mail and General Trust (DMGT) 370.30p -2.04%Jupiter Fund Management (JUP) 210.00p -2.01%Rank Group (RNK) 133.00p -1.92%Renishaw (RSW) 1,125.00p -1.92%Millennium & Copthorne Hotels (MLC) 402.40p -1.64%Moneysupermarket.com Group (MONY) 110.90p -1.60%EnQuest (ENQ) 98.60p -1.60%