A quick round-up of markets now. The FTSE 100 is up around 22 points, or 0.4%, at 5534 in choppy trading. Traders report that volumes are thin around Europe with many off for the Christmas holidays. In France, the CAC40 is up 0.4% at 3115 and Germany’s DAX is down 0.4% at 5867.
Yields on Italian 10-year bonds remain below the 7% level for now, at 6.835%, down 15 basis points from Tuesday. Yields on 10-year German Bunds are little changed at 1.932%.
On foreign exchange markets, the euro is virtually flat on the day against the dollar at $1.3068, off a recent 11-month low of $1.2945.
Niels Christensen, foreign exchnage strategist at Nordea tell Reuters there are risks to the downside for the single currency and that all eyes are on Italy’s auction of debt tomorrow, following the sale of shorter-term debt today:
The bond auction seems to be the biggest event this week and it’s also a theme that will probably dominate the market in the first quarter of next year.
Euro/dollar still looks heavy and the risks are definitely more to the downside. We know markets are quite thin, that leaves the possibility of a large move if the market is hit by some surprising news – bad or good.
The pound is slightly stronger on the day against the euro. The euro stands at 83.44p, compared with Tuesday’s close of 83.40p.
Finally, brent crude prices have edged down as support from Iran’s threat to halt a key oil shipment route ebbs away.
As the FTSE 100 moves into its final days, our business reporters bring you their share tips for the year ahead this morning.
But before we get onto those, a quick look back at the tips for 2011. Unsurprisingly, after headwinds at home and a crisis in the surrounding eurozone, London’s bluechip index lost 6.5% this year. Unfortunately the Guardian’s selection of share tips for the year came nowhere near matching the market’s performance, losing 20% in total.
But one stock stood out. He was too modest to mention it himself, so we’ll highlight here that the top performer, Real Good Food, was tipped by Market Forces columnist Nick Fletcher.
The Aim-listed company’s bakery ingredients business started the year at 24p and has rallied to 37.7p, adding 57%.
This year’s tips include retailers Sports Direct International and Kingfisher, as well as telecoms giant Vodafone and set-top box maker Pace. As Nick says, 2012 looks like it will be another tough year for stock markets, with the continuing prospect of the eurozone collapsing, a large amount of sovereign debt to be refinanced early in the year, China’s economy perhaps facing a hard landing and austerity drives continuing to bite.
A few business and economics-related stories are worth highlighting this morning including the sad news that the downturn in the UK may be behind a rise in cycling deaths.
The number of cyclists killed in the UK has risen during three of the last four recessions, according to figures from the Department for Transport (DfT). More here from our reporter Mark King.
For motorists there is a warning today that they have become the targets of the latest crime trend – fuel theft. High fuel prices are blamed for driving up damage from petrol and diesel theft, while catalytic converters are being stolen for metal content. Jill Insley, head of our consumer team, reports on the fuel crimes here.
Finally, as the retail industry looks far and wide for saviours after a torrid year and no sign of consumer sentiment picking up at home, high-end stores are offering payment by Chinese bank card and Mandarin-speaking staff to serve growing number of visitors. Peter Walker has been following the post-Christmas sales and has more here.
The FTSE has re-opened little changed following its Christmas break, having added 1% in a late “Santa rally” last week that left it up for the month of December. Twenty minutes into what is set to be a thin day of trading, the index of London-listed bluechips is down 3 points, or not quite 0.1%, at 5510.
With little economic data of note on the agenda today the focus will be on two sales of short-term debt in Italy. In thin trading there are already signs of a move toward German Bunds away from those eurozone government bonds seen as more risky. Yields on Italian 10-year bonds earlier pushed above 7%, the level seen as unsustainably expensive by most policymakers and market players.
Nevertheless, Italy’s new technocrat government is expected to get today’s sales away – albeit at a relatively a high price – thanks to demand from domestic banks. Results are due after 10am UK time for the sale of €9bn of six-month treasury bills and the sale of €2.5 billion euros of two-year zero coupon bonds.
The bigger test for Italy comes on Thursday when it will be auctioning €8.5bn long-term bonds.
All that against a backdrop of fresh talk of a looming liquidity freeze after signs eurozone banks are apparently unwilling to take many risks right now.
Banks deposited a record €412bn (£343bn) with the European Central Bank over Christmas. The cheap ECB loans taken up by 523 banks last week came through on Friday and it appears they prefer to park the money back with the ECB rather than lend it on to other banks, thus injecting more liquidity into the financial system.
There are also fresh signs of the eurozone crisis reverberating well beyond Europe with Japanese manufacturing production data overnight showing a worse slump than expected. The debt crisis and floods in Thailand were blamed.
Finally, we will be bringing you updates from retailers to help glean any clues as to whether talk of buoyant post-Christmas sales signals a turnaround in fortunes or merely a last hurrah for the doomed high street.
Welcome back to our live business blog.
Today’s key events:
• Japan’s factory output slumps more than expected, according to data overnight
• Fears of looming liquidity freeze after banks deposit record sum with European Central Bank
• Italy to sell €11.5bn of short-term debt, 10-year yields push back above 7% danger level
• FTSE resumes trading after “Santa rally” going into Christmas break
• Oil prices supported by Iran threats on key shipment route