Cautiousness ahead of a three-day weekend in the States could also be having an effect on risk appetite this morning with US markets closed on Monday for Labour Day.

“Markets are holding well. Many commentators are speaking of edginess and fear. But given the distinct lack of selling and absence of sharp moves lower, this market is quite clearly more robust than it was,” said Financial Trader David White from Spreadex.

“With tapering, a potential conflict on the horizon and all-time highs for equities not a distant memory, prices could have reacted much more severely,” he said.

An upwardly-revised estimate of second-quarter economic growth in the States helped push stocks higher on Thursday as confidence in the recovery offset the increased likelihood that the Federal Reserve will taper asset purchases in September. Jobless claims also came in better than forecasts.

US data will again be in focus on Friday with a number of important economic indicators due for release, including personal income and spending figures, the Chicago purchasing managers’ index and the University of Michigan consumer confidence report.

Worries about an imminent Western military intervention in Syria eased slightly yesterday after UK Prime Minister David Cameron lost an initial vote to take military action. Oppositions decided against the move until they see firm evidence from UN inspectors of the use of chemical weapons by the Bashar al-Assad regime. There will be a further parliamentary vote next week.

The hesitance by America’s main ally complicates things further for US President Barack Obama who has assured that the Syrian government will be held accountable for last week’s deadly attacks. Defense Secretary Chuck Hagel meanwhile has said that the US will not act without allies. He said: “As to international effort and collaboration, it’s the goal of President Obama and this government that whatever decision is taken, there needs to be an international collaboration and effort.”

Mining and oil stocks were heavy fallers this morning as commodity prices fell across the board. Fresnillo, Randgold, ENRC, Shell and BG Group were among the worst performers early on.

Anglo American was lower on reports that it could close or sell off mines at Anglo Platinum (Amplats) if the division doesn’t see improving profits next year. Meanwhile, Rio Tinto was down on concerns over delays to its Simandou iron ore project in Guinea.

Outsourcing giant Serco was continuing to feel the effects of a police investigation into one the “misreporting of data” in connection with it prisoner escort contract with the Ministry of Justice. Shares were lower today following an 11% drop the day before after it said it would forgo any past and future profits on the £285m contract.

Chip designer ARM Holdings was a high riser this morning after Deutsche Bank upgraded the stock to ‘buy’ and more than doubled its target price, saying that fears of competition from Intel have been overdone.

Telecoms giant Vodafone was extending gains after yesterday’s impressive rise following the confirmation that it is in talks about selling its 45% stake in Verizon Wireless to US partner Verizon. The sale could generate up to $130bn for the UK group, reports have suggested.

Online gaming company bwin.party was a heavy faller on the FTSE 250 after it reported a slump in half-year revenue reflecting operational issues associated with the “dotcom migration” to a single technology platform.

Source: ShareCast