London open: Stocks fall on global economic concerns

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LONDON (ShareCast) - - Stocks track US markets lower on fiscal cliff concerns
- Spain said to be nearing bailout request
- Banks fall after broker downgrades

Concerns about the global economy took centre stage again on Wednesday morning, causing the Footsie (FTSE: ^FTSE - news) to sink early on as general strikes take place in Spain, Portugal, Greece and Italy.

Stocks rallied in afternoon trade yesterday on rumours that Spain could be close to officially requesting a bailout. Market analyst Craig Erlam from Alpari said: "If true, this would be very well received in the markets as the long running saga surrounding Spain has dragged equity markets lower on numerous occasions this year. A bailout request would indicate that Spain is committed to reducing its deficit and regaining competitiveness."

Nevertheless, the UK equity markets started on the back foot this morning, "tracking losses in the US overnight as concerns over the much feared fiscal cliff ate away at sentiment on the other side of the Atlantic (Frankfurt: 640218.F - news) ," said financial sales trader Matthew Nelson from Spreadex.

Yesterday, a fund manager survey from Bank of America Merrill Lynch showed that some 54% of those polled see the US fiscal cliff as the biggest tail risk for the global economy, up from 42% in October.

"It's a busy day of announcements today with the Claimant Count Rate and Unemployment Rate out at 09:30 and the Bank  of England Inflation Report out at 10:30. Gilt prices have fallen slightly this morning in anticipation of Governor King speaking with questions on the fragile economy, the central bank's independence and prospects of more QE all likely to be high on the agenda," he said.

Meanwhile, industrial production data in Europe (Chicago Options: ^REURUSD - news) , inflation numbers in the US and a host of other economic figures are also scheduled for release today.

In other news, the London Bullion Market Association has predicted that the price of gold would rise around 7% from today's prices to $1,849 per troy ounce by September 2013.

FTSE 100 (FTSE Index: EO100.FGI - news) : Resources (Euronext: ERS.NX - news) and financials provide a drag

Mining (Euronext: SMI.NX - news) and oil stocks were among the worst performers on macroeconomic concerns , with ENRC, EVRAZ and Shell (LSE: RDSB.L - news) registering losses. Even Tullow Oil (LSE: TLW.L - news) , which said this morning it is on track to hit its full-year production targets, was lower.

Banking peers Royal Bank of Scotland (LSE: RBS.L - news) (RBS) and Barclays (LSE: BARC.L - news) were in the red after Liberum Capital downgraded its ratings for the stocks to 'hold', citing the impact of a weak Eurozone economy.

Engineering (Milan: ENG.MI - news) consultancy AMEC (LSE: AMEC.L - news) gained after saying it was trading in line with expectations despite ongoing economic uncertainty. The firm said mining activity was slowing, but conventional oil and gas activity remained strong, particularly in the North Sea and Gulf of Mexico.

Supermarket group Sainsbury (LSE: SBRY.L - news) was falling early on despite reporting a better-than-expected underlying half-year profit before tax as it continued to outperform in a challenging market.

Defence group BAE Systems (LSE: BA.L - news) was down after saying that it has reached a settlement with the government of Trinidad and Tobago after a contract to provide offshore patrol vessels was cancelled two years ago.

Telecoms group BT (LSE: BT-A.L - news) fell after saying that it has made an agreed offer to acquire Tikit Group, the information technology services provider to the legal and accountancy profession, for £64.2m.

Energy (NYSEArca: JJE - news) supplier SSE (Xetra: A0RFBG - news) was in demand after posting a 38% jump in profits in the first half as it immediately moved to offset a media storm over its hike in household bills last month. The firm pushed up its dividend 5% to 25.2p as earnings per share leapt 40.6% to 35.3p.

FTSE 250 (FTSE: ^FTMC - news) : Talvivaara rebounds after leak stopped

Nickel miner Talvivaara surged, recovering after recent falls, after saying that the leakage of the gypsum pond at the Sotkamo mine, which started two week ago, has now been stopped. However, the company said that it was re-assessing its fourth-quarter production target after a temporary plant shutdown.

Inter-dealer broker ICAP (Xetra: A0BKYB - news) dropped after headline pre-tax profit dropped 26% in the first half and revenue fell 14%. Bank recapitalisation and deleveraging, uncertainty over regulatory reform and even the London Olympics were cited by boss Michael Spencer as reasons for the decreases.

Soft drink peers Britvic (Berlin: B6S.BE - news) and AG Barr were higher after agreeing on a merger. Assuming the tie-up goes through, Britvic shareholders will end up controlling 63% of the combined company and AG Barr shareholders 37%. The new entity will be called Barr Britvic Soft Drinks.

Shares in Egypt-focused gold miner Centamin got a boost after it reported a 43% quarter-on-quarter leap in basic earnings per share (EPS) in the three months ended September 30th.

Online gaming firm bwin.party digital entertainment was higher after reiterating its view that it is "acting and has always acted in compliance with applicable laws" after its co-CEO was questioned by Belgian authorities on concerns that it was breaching the country's gambling legislation.


FTSE 100 - Risers
Weir Group (Other OTC: WEIGF.PK - news) (WEIR) 1,784.00p +2.65%
Amec (AMEC) 1,054.00p +2.03%
Centrica (Xetra: A0DK6K - news) (CNA) 313.10p +0.74%
ITV (Xetra: A0BLQP - news) (ITV) 95.30p +0.74%
IMI (Xetra: 389425.DE - news) (IMI (Xetra: 858496 - news) ) 938.50p +0.43%
Unilever (Frankfurt: A0JNE2 - news) (ULVR) 2,349.00p +0.34%
Reed Elsevier (Berlin: RDEB.BE - news) (REL) 620.00p +0.32%
Tesco (Dusseldorf: 408910.DU - news) (TSCO) 321.95p +0.30%
Carnival (LSE: CCL.L - news) (CCL) 2,508.00p +0.24%
Fresnillo (Berlin: FNL.BE - news) (FRES) 1,939.00p +0.15%

FTSE 100 - Fallers
Eurasian Natural Resources Corp. (ENRC) 284.00p -1.93%
Royal Dutch Shell 'B' (RDSB) 2,186.00p -1.82%
Marks & Spencer Group (MKS (Berlin: 10389081.BE - news) ) 378.60p -1.71%
Royal Dutch Shell 'A' (RDSA) 2,123.50p -1.69%
Evraz (EVR) 230.00p -1.63%
Kingfisher (Dusseldorf: KFI1.DU - news) (KGF) 284.40p -1.56%
Burberry Group (Xetra: 691197 - news) (BRBY) 1,212.00p -1.54%
Sainsbury (EUREX: SAN.EX - news) (J) (SBRY) 342.00p -1.50%
GlaxoSmithKline (Other OTC: GLAXF.PK - news) (GSK) 1,340.50p -1.18%
GKN (Xetra: 694194 - news) (GKN (LSE: GKN.L - news) ) 205.50p -1.06%

FTSE 250 - Risers
Talvivaara Mining Company (TALV) 94.15p +12.89%
Ocado Group (Berlin: 0OC.BE - news) (OCDO) 62.10p +4.72%
SIG (Berlin: QIG.BE - news) (SHI (Other OTC: SHCC.PK - news) ) 106.00p +3.31%
Bwin.party Digital Entertainment (BPTY) 117.00p +3.27%
Fidessa Group (Other OTC: FDGRF.PK - news) (FDSA) 1,312.00p +2.90%
JD Sports Fashion (Xetra: 903386 - news) (JD.) 717.45p +2.35%
Britvic (BVIC) 376.80p +2.31%
Barr (A.G.) (BAG) 442.00p +2.27%
Grainger (LSE: GRI.L - news) (GRI) 116.90p +1.65%
Centamin (DI) (CEY) 72.00p +1.55%

FTSE 250 - Fallers
ICAP (IAP) 286.30p -7.62%
Menzies(John) (MNZS) 572.00p -3.05%
TalkTalk Telecom Group (TALK) 215.00p -2.71%
Cable & Wireless Communications (CWC) 36.62p -2.01%
Go-Ahead Group (GOG) 1,214.00p -1.70%
UK Commercial Property Trust (UKCM) 65.75p -1.42%
JPMorgan American Inv Trust (JAM) 900.51p -1.42%
St James's Place (Xetra: 888460 - news) (STJ) 388.10p -1.15%
BBA Aviation (LSE: BBA.L - news) (BBA) 203.60p -1.07%
African Barrick Gold (ABG) 402.20p -1.01%

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