London pre-open: Spanish long-term debt yields fall sharply

17th Oct 2012 07:29

City sources predict the FTSE 100 will open up four points from yesterday's close of 5,871, edging higher after a strong performance by US stocks on Tuesday, which saw the Dow Jones Industrial Average post its biggest gain in over a month on some robust corporate earnings and improving news flow from the Eurozone. Significantly, overnight ratings agency Moody's announced that it was maintaining Spain's sovereign debt rating unchanged at Baa3, although with a negative outlook. Yields on Spain's long-term (10 year) bonds are now falling by 27 basis points to the 5.63 per cent mark. As well, this morning Market News International (MNI) reported that negotiations between the troika and Greek authorities on the austerity package are closer to a conclusion than yesterday's news on divisions within the government coalition suggested, analysts at Unicredit are commenting. Nevertheless, and of note, some market chatter was still emphasizing the opposite earlier this same morning. Back in the UK, minutes from the October meeting of the Bank of England's Monetary Policy Committee (MPC) will be released at 09:30 this morning. The Bank's current round of quantitative easing (QE) ends next month and economists will be scouring the minutes to see whether there are any clues as to whether the QE tap will be turned on again. MPC member Martin Weale has expressed concern about sanctioning more QE while inflation remains above the Bank's 2.0% target rate. Weale's colleagues Ben Broadbent and Spencer Dale have also recently gone on record to warn about inflation risks. Also on today's agenda is the most recent UK unemployment reading, also due out at 09:30.As an aside, Japanese authorities will hold a special cabinet meeting this morning. Speculation is rife that the government may tap budget reserves to stimulate a slowing economy.Of interest, following yesterday's televised Presidential debate Stateside, Intrade is giving a 61.5% probability of an Obama victory. In company news, Anglo-Australian mining giant BHP Billiton saw iron ore output rise year-on-year in the third quarter, but fall from the previous quarter's production levels as a result of the planned shut-down associated with the Inner Harbour expansion project in Western Australia. Iron ore production was up 1% year-on-year but down 3% quarter-on-quarter to 39.8m tonnes.Xstrata, the Switzerland-based miner which looks set to merge with commodities trader Glencore, said volumes of thermal coal, zinc and lead in concentrate and zinc metal in the third quarter increased year-on-year. Volumes of copper and nickel declined, however.Diageo is in talks to buy a stake of about 20% in Vijay Mallya's in a deal that would give it management control of the Indian distiller, said two people with knowledge of the matter, Bloomberg News reports. Diageo would buy new shares in United Spirits and also purchase part of Mallya's 28% stake, said the people, who asked not to be identified as the process is private. Diageo would get the right to appoint United Spirits's Chief Executive Officer and other key managers, while Mallya is expected to remain Chairman, they said.Tempus in The Times has today said that the fuss surrounding Sportingbet has set traders musing on the next potential bid target in the online gambling sector. Most punters' top pick is Bwin.party digital entertainment. Its shares, up 1.5p at 116.5p, have been held back by regulatory fears in Europe, but the prospect of a licensed re-entry into the American market looks enticing. "Place your bets," it concludes.