Market overview: Depreciation of Sterling part of rebalancing

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LONDON (ShareCast) - 1122: Strengthening in pound Sterling since re-intensification of Eurozone crisis is not a welcome development, King has just stated. He is also doing a lot to emphasize that monetary policy can only slow down adjustment of economy to real equilibrium, but by no means impede it. FTSE 100 (FTSE Index: EO100.FGI - news) dow 36 to 5,750.

1005: Depreciation of Sterling part of rebalancing process, King adds. Its (Euronext: ALITS.NX - news) depreciation would thus seem to be expected to be more permanent.

1028: The FTSE 100 is down 33 points at 5,753 as resource stocks and banks continue to provide a drag. Oil titan Shell (LSE: RDSB.L - news) is among the worst performers on the Footsie (FTSE: ^FTSE - news) after announcing that it has raised its stake in the North Sea Schiehallion field to 55 per cent, at the same time as selling its interest in the Seal are in Canada. Meanwhile, banking peers RBS (LSE: RBS.L - news) and Barclays (LSE: BARC.L - news) have been hit by a downgrade from Liberum Capital to 'hold'.

0933: Governor King says that the transfer of coupon payments from the APF to the Treasury was a factor in the deliberations of the Monetary Policy Committe at its last meeting.

0932: Bank of England expects inflation to fall to 2% over the relevant policy horizon. GDP to fall back sharply this quarter, output may even shrink a little in quarter four Governor King says. "UK faces unappealing inflation/growth combination. Absent a further drop in the exchange rate, perhaps not reasonable to expect much faster growth," he adds. FTSE 100 down 30 to 5,756.

0930: UK claimant count rose by 10,000 in October (Consensus: 0), but the unemployment rate dropped to 7.8 per cent for the three months to September after a reading of 7.9% per cent in the previous month, a tenth of a percentage point better than was expected.

0809: London has followed Wall Street's lead and opened lower. FTSE 100 is down 26 at 5,760. Engineering (Milan: ENG.MI - news) consultancy AMEC (LSE: AMEC.L - news) provides a bit of cheer by confirming it is trading in line with expectations. Sector peer Weir Group (Other OTC: WEIGF.PK - news) rises in sympathy. Supermarket chain Sainsbury (LSE: SBRY.L - news) beat some brokers' expectations with its interim profits but share price reaction has been subdued.