Disappointing Burberry results and pressure from miners keeps FTSE negative

European stocks edged lower in early trading, tracing losses overnight in Asia and on Wall Street. Resource stocks and retailers suffered at the hands of investors on the back of weak Chinese data and worse than expected results from Burberry Group.

Despite a positive previous session for the FTSE, volumes were thin indicating a lack of conviction from investors as concerns over the eurozone debt crisis and slowing global growth lingered. By mid morning today the FTSE was down 0.3%, the CAC down 0.8% and the DAX lower by 0.3%. The Spanish IBEX managed to buck the trend by gaining 0.2% as further details emerged of the bank bailout specifications.

Until now little detail had been released as to the conditions involved with the Spanish banks bailout and as the market has a distinct dislike of uncertainty, news reporting that Spain will have to hand over most control of its banks to European institutions in exchange for assistance has been well received by the markets even though this could mean that junior bond holders and preference share owners could lose money. RBS pushed onto the top gainers list, up 0.8%.

For the broader UK market, pressure has been significant from miners as they traced losses from the US and Asian markets. A poor start to the reporting season in the US with Alcoa missing expectations and dropping 4.1%, combined with metal prices remaining within a tight range as investors await GDP data from top consumer China has kept miners in negative territory. Rio shed 0.9% whilst Vedanta gave up 1%.

Burberry has proved to be the largest mover of the session so far on the FTSE, currently down 5.69%. It is not often that Burberry disappoints with its results but fiscal first quarter results did just this, although revenue increased, sales growth slowed due to challenging economic conditions. Underlying sales growth slowed down from 15% in Q4 2011 to 11% in Q1 2012, an increase of 13% was expected.

With no important British economic data due out today the main focus for the markets as the session progresses will be on the minutes from the latest Federal Open Market Committee in the US which are expected this evening. Last month we received news that the Federal Reserve will expand Operation Twist, dampening hopes of further quantative easing. The minutes will give further insight into this decision and investors will be keenly looking for any signs of a more aggressive stance on policy.