FTSE has posted modest gains this morning to stand at 5785 at the time of writing.This slight improvement comes after news broke over night the Bank of Japan would embark on a further round of QE in effort to head off deflation and weaken the yen. However after nearly two decades of unorthodox monetary policy in the land of the "rising sun" we are reminded of the famous Einstein quote on insanity, of which he said “Insanity is doing the same thing, over and over again, but expecting different results.”

 

As far as individual movers are concerned this morning Kazakhmys and United Utilities top the pile of winners both are better by more than 2.5% on the day and are being given a run for their money by Rexam and Fresnillo which are up by 2.17 & 1.64% respectively.

 

Whilst Barclays Bank are the top faller down by 1.64% on the day.

Volumes are however frankly pathetic with only 242 million shares traded  at just after mid day  and almost half of that volume can be accounted for by Lloyds, Vodafone and Barclays. That concentration of volume and the limited turnover elsewhere will be of great concern to all market participants.

London markets have sold off by some 40 points or more this morning with the FTSE testing back to and below 5850. The weakness can be attributed to the ongoing crisis in Spain and the perception in the markets that for all the rhetoric over recent weeks from European leaders - they have done little to change the situation on the ground or to halt what some see as the inevitability of Spain having to be bailed out.

 

Figures this morning which showed a continued and worsening rise in bad debts at Spanish banks have done nothing to ease those fears. The Euro has eased against the US$ this morning whilst yields on Spanish bonds have risen once more.

 

As far as individual stock are concerned the biggest faller in London's top flight today is Aviva which have fallen  by some 4.8% sector peer prudential are also lower by 2.8%.

 

There are few gainers in what can genuinely be called a broad based sell off  and only 5 stocks led by the defensive favourite Imperial Tobacco are up by more than one percent the day at the time of writing. Volumes remain on the low side with just over 300 million shares traded in London's topflight as we approach 13.00 hours.

 

Ahead of the US open futures markets suggest a weaker start for  New York equities and both Gold and Crude oil will go into the North American session weaker on the day.

FTSE has traded lower this morning giving back around 17 points on the day so far the biggest faller in the top flight is luxury fashion group Burberry down by more than 18% as I type. Burberry spooked the market this morning with the release of what amounted to a profits warning  for its full year prospects. The company highlighted falling sales growth on a global basis and said that profits for the full year to March will be at the lower end of market estimates. Luxury brands such as Burberry have enjoyed  high ratings and earnings multiples over the last two to three years as sales boomed in Asia and other emerging markets.  But with sales in China falling off dramatically it seems that sector could come back down to earth with a bang.

 

Mining stocks have also taken a knock this morning despite a buy recommendation for the sector from strategist at a leading Swiss bank  names like Vedanta, Anglo American and Kazakhmys are down by at least 3% and given the influential sectors weakness its a wonder that London is not down much more sharply.

 

Modest gains in defensive names are offsetting the cyclical miners but  the  diggers and drillers are much more volatile as a group  and a betting man would think that the miners will win  out in this tug of war.

London's FTSE 100  index has moved up once more this morning to stand at 5790  these gains of some 13 points follow the sharp bounce that occurred on Thursday after the ECB said it would be buying the bonds of Euro zone members in effort to bring down borrowing costs for sovereign sates and provide the markets with the clearest possible signals that  the single currency is not  a "dead duck".

 

M&A was also centre stage this morning as Glencore launched and 11th hour improvement to the terms of its all share offer for  Xstrata.  The increased terms will give major share holders such a Qatar something to think about over the weekend and could swing the balance into Glencore's favour once more.  Though some analysts and commentators continue to ask what genuine additional synergies a full blown merger will bring? Given the existing cross holding and close business relationship that already exists  between the two groups.

As you would expect  many of the Mining stocks are better in London this morning as a result but they are being given a run for their money by Barclays Bank which are up by 5.36% to 203p, whilst RBS add 4.3% to stand at 243.1p. If cyclical stocks such as Miners and Banks are up on the day then you would expect defensive names to be weaker and indeed they are with the like of Imperial Tobacco down by 1.9%, Glaxo are easier by 1.6%  and drinks giant Diageo are down by 1.56%.

 

All eyes today though will be focused on the key Non Farm Payrolls number due out at 13.30 pm, this important measure of US employment will provide markets with clues to the health of the underlying US economy and therefore the likelihood or otherwise of further QE  from the Federal reserve.  Estimates range from 70,000 to 185,000 with the average forecast coming at a headcount of  130,000, versus last month figure of 163,000.

 

Of course markets will also be  closely watching the rate of unemployment though perversely a higher unemployment rate may be  seen as positive for the markets as it may hasten the Fed to introduce additional stimulus measures.

FTSE remains virtually unchanged on the day  as we approach the half way stage in today's session. Though notably we remain well below the key 5700 level which was broken  earlier this week. Oil majors BP and BG are the days biggest losers down 3% a piece.

 

Wolsey, Xstrata and Smith and nephew are the top gainer up by at least 1.9% each. Outside of Vodafone, BP and Lloyds volumes are thin.  Those three names account for over 85 million shares  out of a total turnover of 202 million shares which is a low turnover  by anyone standards 

 

A poor German bond auction has given the market pause for thought the auction was effectively under subscribed this is first time in recent months that German paper has not flown of the shelf.  Whether this marks a turning point in investor attitudes in regards to yields that they are willing to to safely park their cash remains to be seen. But with the  Alice in wonderland world of negative interest rates a genuine possibility in the Eurozone going forward it marks and interesting turning point if nothing else.

FTSE has sold off once more this morning giving back some 38 points to trade at 5718 as I type.

London's blue chip index is outperforming its European peers on the downside this morning no doubt helped in part by the sharp fall in one of its most active stocks Vodafone. The mobile phone operator is weaker by 1.75% following a note from a leading US broker, other notable fallers include RBS, Bats and Land Securities.

The days largest gainer is Oil Service group Petrofac which are up by 1.45%.

US Futures suggest Wall Street will return from the long weekend modestly better but ongoing developments in Europe could change that call before we get to the open.

FTSE is up by some 25 points this morning at 5736  in a quiet European session that comes on the US Labor Day holiday, which officially marks the end of Summer as far as the markets are concerned. With  Wall Street closed this afternoon we have probably seen the best of London market for today already, though the end of the week will see the release of the August Non Farm Payrolls data ( US Unemployment) which will be keenly scrutinised  for clues about the health or other wise of the US economy and what that means in regard to the likelihood of a third round of QE in the USA.

London has been led higher by Mining stocks once more ( they are better on hopes of  further stimulus measures  for the Chinese economy ) indeed all but 2 of the top 10 gainers are from that sector. 

Vedanta  and Fresnillo are the best performers up by 3.5% and 4.2% respectively. The days principal fallers are  Admiral Group and ARM  Holdings which have given back 3.46% and 2.44% respectively.

Volumes are on light side as we would expect on a Monday, though Glencore has traded 16 million shares in the session  so far, as the company decides not to improve its offer for Xstrata. The bid, which has not received the backing of key shareholders,  may now fall at the last hurdle.