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London open: markets flat ahead of economic data

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Stocks opened flat on Tuesday morning as ongoing uncertainty over Federal Reserve monetary policy and concerns over the US debt ceiling continue to dominate market sentiment.

Investors were also choosing a cautious approach ahead of business confidence data from Germany this morning, as well as American home prices and consumer confidence figures later on.

Markets across the globe declined on Monday as traders continued to digest the surprise decision by the Fed last week not to begin scaling back stimulus. While St Louis Fed President James Bullard admitted that the central bank could still trim asset purchases at its next meeting, fellow official William Dudley (New York Fed) said the US has yet to show “any meaningful pickup” in momentum.

He said the Fed must push hard against headwinds and he would only feel comfortable with a ‘taper’ as long as there is a “continued improvement in the labour market”.

“With no less than 12 Fed speakers due to speak in the next five days investors will be looking for clues as to where each member stands vis-à-vis the taper question,” said Senior Market Analyst Michael Hewson from CMC Markets.

As the ‘no-taper’ rally begins to fade, the focus has turned to talks over the debt ceiling in recent days after President Barack Obama urged Congress to approve a budget to prevent a government shutdown by October 1st.

Market Analyst Craig Erlam from Alpari said that slow progress in negotiating is “nothing new” and the debate is likely to go down to the wire, as has been the case before.

“Despite being fully aware of this and the majority not believing for a second that Congress will allow a shutdown of government, traders continue to act with caution which truly highlights the lack of confidence in the people who run the world’s largest economy,” he said.

Miners track metal prices lower

Mining stocks were under the weather this morning as gold, silver and copper prices edged lower. Randgold, Fresnilllo, Vedanta, Anglo American and Rio Tinto were in the red early on.

Power systems firm Rolls-Royce was a high riser this morning after Jefferies raised its target price for the stock from 1,250p to 1,400p and kept a ‘buy’ rating, showing optimism with its ‘TotalCare’ services.

Continued growth in the US and a return to growth for advertising revenues enabled publisher Euromoney Institutional Investor to signal strong trading for the fourth quarter, causing shares to advance this morning.

Finance house Close Bros also gained after it reported a strong set of full-year results as Asset Management returned to profit while Banking and Securities improved.

Source: ShareCast

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