United kingdom Daily news: FTSE LIVE: Eurozone bond buying plan floated at G20

FTSE LIVE: Eurozone bond buying plan floated at G20

By This Is Money Reporters

PUBLISHED: 02:36 EST, 20 June 2012 | UPDATED: 08:44 EST, 20 June 2012

14.40: The Dow Jones has opened down 4.8 points at 12,832.6 amid uncertainty over whether the U.S. Fed is willing to launch more aid for the economy.

The FTSE 100 is ahead 23.4 points at 5,609.7.

Mexico getaway: Eurozone crisis was a major concern of G20 leaders meeting at the Los Cabos summit

13.20:

Speculation that today's meeting of the U.S. Federal Reserve will lead to more money printing to boost the world's biggest economy is keeping markets in the black today.

The FTSE 100 has extended morning gains and was up 28.6 points at 5,614.9 in lunchtime trading.

Pressure on central banks to act is growing amid mounting evidence that the eurozone debt crisis is affecting major economies, including the US and China.

Greece is still struggling to form a coalition government and is expected to seek to renegotiate the package on its bailout, leading to uncertainty about its position in the euro.

Spain's banking crisis has caused growing concern but its borrowing costs fell back below the unsustainable 7 per cent level today amid reports Germany could approve bailout funds being used to buy bonds of struggling economies.

Simon Denham of Capital Spreads said of the stimulus speculation: 'Ongoing turmoil in the eurozone crisis may convince the Fed to extend Operation Twist, selling short term debt and buying long term bonds at its meeting due to start later today.

'In turn that speculation supported a rally in the Dow Jones yesterday and in the last few days the markets have been entertaining the idea of more stimulus.'

Denham said if the Fed neither extends Operation Twist nor goes a step further with a round of QE3 the market bulls could be 'very disappointed'.

Michael Hewson of CMC Markets said: 'Given the recent lacklustre U.S. economic data investors have been banking that Fed chairman [Ben] Bernanke and the Federal Open Market Committee will indulge in further monetary policy easing.

'Despite this speculation there remains a political dynamic with respect to further Fed intervention in an election year, which could make any further substantial easing politically problematic for the Fed, given fierce Republican criticism of the policy a year ago.'

Fawad Razaqzada of GFT Markets said of the Fed talk: 'The scope for disappointment is now quite high. But recent U.S. economic data releases have been grim. These have dashed hopes that the U.S. was decoupling from the rest of the world, and could forge ahead even as Chinese growth slowed and the eurozone imploded.< /p>

'As far as the eurozone is concerned, Greece is still without a government although a coalition is expected soon. But there is still talk that any coalition will seek to renegotiate the terms of its EU/IMF/ECB bailout - something that Germany continues to resist.

'Meanwhile, there are mixed messages coming out of G20, although there appears to be some agreement to take action to cut borrowing costs for Spain and Italy. But whether Germany is fully on board with how this may be achieved remains uncertain.'

Miners and financial stocks were the biggest risers in London on the back of the U.S. stimulus speculation, with Glencore ahead 3 per cent or 9.3p at 339.3p, and Hargreaves Lansdown up 4 per cent or 18.6p at 514.5p.

Outside the top flight, Argos owner Home Retail Group fell 4 per cent, undoing some of its 24 per cent gains from yesterday, after HSBC downgraded the stock to neutral from overweight.

Its shares had enjoyed a much needed cha nge in fortune yesterday after strong sales of laptops and tablet computers helped Argos post flat like-for-like sales in the last quarter, much better than City expectations for a drop of around 4 per cent. But shares were today down 3.6p at 88.3p.

11.45:

The FTSE 100 has edged into positive territory, up 9.1 points at 5,595.4.

But the London market appears to be treading water ahead of a possible U.S Federal Reserve announcement of further stimulus later.

Speculation over a new asset purchase programme when the Fed meets mirrors growing expectations that the Bank of England will extend its quantitative easing programme early next month. Read more here.

Ishaq Siddiqi of ETX Capital said: 'Hopes for further stimulus measures by the Fed have helped to lift spirits, albeit volumes are r elatively thin and volatility remains high as eurozone debt tensions persist.

'The G20 meeting has come to an end and was regarded by most as a non-event, yielding little but the same rhetoric heard in recent months that the eurozone must do more to help itself.'

Chris Beauchamp of IG Index said: 'Investors tread carefully today, lest they are caught out this evening by a Fed statement that confounds expectations.

'As the global economy teeters on the brink, and the eurozone crisis festers away in the background, the hope for many is that Helicopter Ben [Fed chairman Bernanke] and his band of policymakers at the Fed will unleash a new round of stimulus, or at the very least tweak the language of their statement to make it more accommodative.'

In a quiet session for domestic corporate news, ITV shares were 3 per cent higher as investors continued to speculate about possible private equity interest in the broadcaster.

Panmure Gordon stockbrokers also issued a note reiterating its buy rating and said the recent Premier Le ague auction highlighted the potential value of content in relation to ITV's own studios business. Shares were 1.9p higher at 76.15p.

A number of stocks were trading without the right to their most recent dividend payment, with Severn Trent 120p lower at 1629p and United Utilities down 26.75p at 642.75p.

Meanwhile, Premier Inn and Costa coffee group Whitbread continued its ascent after a strong trading update triggered a 6 per cent rise in its share price yesterday. The stock was up by another 20p to 1987p today.

8.45: The FTSE 100 has opened down 9.6 points at 5,576.7 as investors anticipate fresh measures by eurozone policymakers to tackle the region's debt crisis and further stimulus action by the U.S. Federal Reserve.

Reports suggest that Germany's Angela Merkel could bow to pressure and agree a rescue effort for Spain and Italy that would see the eurozone's permanent bailout fund used to buy their government bonds.

French president Francois Hollande said the suggestion of bond buying was worth exploring and would be discussed at a meeting in Rome on Friday between him, Merkel, Spain's Mariano Rajoy and Italy's Mario Monti.

At the G20 meeting in Los Cabos, Mexico, European leaders said they intend to work on concrete steps to integrate the region's banking sector, seen as a major step to break the cycle of debt-troubled countries bailing out their ailing banks which only pushes governments ever deeper into debt.

Earlier this week, the yield on Spanish 10-year bonds broke above 7 per cent, a key threshold above which borrowing costs become too expensive for a country to afford over the long term. Such levels have previously led to bailouts in Greece, Ireland and Portugal.

'When Spanish yields hit 7 per cent, we're getting into the "intervention" zone. It's either policymakers taking action, or the country takes the road to insolvency,' said Franck Dixmier of Allianz Global Investors.

In the U.S., the latest Federal Reserve Open Market Committee meeting wraps up today with a statement that could unveil further help for the fragile economy after the London markets close.

News yesterday that the UK's benchmark inflation rate had fallen to 2.8 per cent has also prompted speculation that the Bank of England may announce more stimulus for the economy.

Minutes from June's Bank of England monetary policy committee meeting will be released later, with investors keen to see whether there has been any change in the number of members voting for further quantitative easing.

Forecasters see one less MPC member voting to maintain the central bank's QE programme at current levels, with a vote count of 7-2 predicted versus 8-1 in May.

London copper futures slipped on worries over Spain's debt problems and as some investors cashed in on gains made the previous day. But the price was supported by talk of further stimulus by the U.S. Fed whi ch could lift demand for industrial metals.

Brent crude was steady at under $96 a barrel but prices stayed close to 17-month lows hit the previous session.

British unemployment figures will be released later, with May's claimant count seen falling by 3,000 after a 13,700 drop in April. The ILO unemployment rate for April is expected to remain unchanged at 8.2 per cent.

The FTSE 100 closed up 95.22 points or 1.7 percent at 5,586.31 yesterday.

Ex-dividend factors will knock 2.27 points off the index today, with Experian, Land Securities, Severn Trent and United Utilities all trading without their payout attractions, which includes a special dividend for Severn Trent.

Stocks to watch today include:

Rio Rinto: The miner will spend $3.7billion to increase iron ore output in Australia by a further 25 per cent to 353 million tonnes a year by 2015, shrugging off forecasts of waning demand and a looming global supply glut.

Man Group: The gr oup has named Tim Peach as managing director and head of its operations in Asia Pacific, a spokeswoman for the $59billion hedge fund firm told Reuters on Wednesday.

Kesa Electrical: Full-year results.

Independent Resources: First-half results.