FTSE preview: Shares down on eurozone fear

 

Britain's FTSE 100 index is seen opening flat to slightly lower on Tuesday, consolidating as investors lock in profits after solid gains last week, with concerns over euro zone sovereign debt lurking in the background.

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Flat start: Investors will balance economy fears with corporate news today.

The UK blue chip index looks set to open unchanged to down 6 points, or 0.1% lower, according to financial bookmakers, after it closed down 25.39 points, or 0.4%, at 5,849.96 on Monday.

The index hit a 29-month closing high on Friday as investors cheered the US Federal Reserve's commitment on Wednesday to extend quantitative easing.

In terms of domestic economic news, British house prices fell last month at their sharpest pace in a year-and-a-half as a lack of mortgage finance and an uncertain economic outlook deterred potential buyers, a survey by the Royal Institution of Chartered Surveyors indicated.

British retail sales picked up in October, driven mainly by higher prices rather than nervous shoppers buying more goods, a survey by the British Retail Consortium showed.

Investors will also look at September trade balance figures, September industrial production data, and September manufacturing output data.

The euro has dropped 3% against the dollar from a 9-and-a-half month high set last week and against the yen has slipped to a one-week low.

Ireland is the latest country to rattle the single currency, with Irish borrowing costs extending a month-long climb on worries about a political impasse in Dublin ahead of a budget vote. The yield on Irish 10-year bonds hit 8 percent for the first time on Monday.

Adding to the market's cautious tone, top officials at the US Federal Reserve offered differing assessments of the central bank's $600bn bond-buying programme announced last week.

Another uncertainty for markets is a G20 leaders' meeting this week in South Korea, where currency tensions loom large.

'With growing criticism and uncertainty about the effectiveness of QE2 and the G20 meeting later this week, traders are seen taking a breather from the market and booking profits,' Jonathan Sudaria, a dealer at Capital Spreads, wrote in a note.

'Also, the resurgence of European Sovereign debt worries could be a driver of momentum today,' he said.

Wall Street retreated from a two-year high on Monday, weighed down by financial stocks and a stronger dollar. US. September wholesale inventories data is scheduled for release.

There will be updates today from Associated British Foods, Barclays, Hammerson, InterContinental Hotels, Legal & General, Marks & Spencer, Randgold Resources, Vodafone, Babcock, Capital & Counties, Drax Group and Jardine Lloyd Thompson.

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