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FTSE LIVE: Market opens up as sentiment settled by Italian political resolution



09.20: The Footsie has already lost most of those slight gains, now standing just 3 points to the good at 6,430.


The economy may have returned to growth in the first quarter but updates today highlighted the continued tough conditions faced by UK firms.


On the high street baker Greggs warned that it was performing below City hopes. It was 34.05p lower at 428.45p after it reported a 4.4 per cent drop in like-for-like sales in the 17 weeks to Saturday and said profits were currently running short of last year and against its own hopes.


The poor weather was largely to blame for the shortfall, but shares still fell 7 per cent or 34.05p to 428.45p.





Deadlock overcome: Italian centre-left politician Enrico Letta is sworn in as the country's Prime Minister after two-months of damaging political impasse - the Italian FTSE MIB gained 1.4 per cent

Shares in Balfour Beatty fell 10 per cent after it reported a £50million profits shortfall in its UK construction business. It was the biggest faller in the second tier, after warning that market conditions in UK construction continue to be difficult. Shares slid 25.8p to 220.6p.


Pest control firm Rentokil Initial was also higher in the FTSE 250 index, up 5.4p to 102.05p, after it offloaded loss-making parcel delivery firm City Link to Better Capital for £1, taking a £40million charge in the process.




08.45:


The FTSE 100 has risen 18 points (0.3 per cent) on opening, to 6,444.


The blue-chip index was buoyed by strong results from Aberdeen Asset Management, while sentiment was also supported by the resolution of political stalemate in Italy.


Aberdeen surged 5.3 per cent in early deals after announcing a 25 per cent jump in first-half revenues, saying it would pay a dividend of 6p per share - a 36 per cent increase on 2012.


The index underperformed continental indexes, however, with the Italian FTSE MIB gaining 1.4 per cent after Enrico Letta was sworn in as the country's Prime Minister after two-months of damaging political impasse.

The Footsie had outperformed the Italian index so far this year, up 9 per cent compared to a 1.8 per cent gain for the Italian blue chips.


And Asian shares crept ahead today, while the dollar lost ground to the yen as markets hunkered down for a busy week for economic data and central bank policy meetings in the eurozone and United States.


Activity was sparse, though, with Japanese markets closed for a holiday and China off until Thursday. The MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 per cent, but off a six-week high touched on Friday. South Korean shares were flat, while Australia's market added 0.5 per cent thanks to ongoing strength in banking stocks.


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While recent disappointing growth data from the US, China and the eurozone has undermined commodity markets and pushed down bond yields, it has had limited impact on global equities.


'We think this reflects a faith by market participants in the 'monetary policy put', which associates market supportive policy reactions to disappointing economic developments,' said analysts from Barclays in a client note.


'For now, it seems to us that this is justified, and partly on that basis, we continue to recommend overweight exposure to equities.'


Indeed, speculation is rife that the European Central Bank (ECB) will have to cut interest rates at its policy meeting on Thursday given the dreary run of economic news from the region.


A Reuters poll of 76 economists showed a narrow majority of 43 expected a rate cut of 25 basis points, taking it to a record low of 0.5 per cent.


However, market rates, such as that for bank-to-bank lending, are already so low that such an easing might have no more than a symbolic impact.


'The ECB will probably cut the rate, but this move shouldn't weaken the euro unless the bank drops hints that some more dramatic policy - like a negative deposit rate - is back on the agenda,' said Anna Hibinio, a global forex analyst at JPMorgan.

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