Stock indices recover from early losses; Italian bond auction eyed

<p>Stock indices recovered from sharp opening falls to trade lower between 0.1% and 0.8% on Thursday, with traders continuing to cast an eye on Capitol […]</p>

Stock indices recovered from sharp opening falls to trade lower between 0.1% and 0.8% on Thursday, with traders continuing to cast an eye on Capitol Hill. As another sign of market confidence in Italian debt, they auctioned off three- and 10-year bonds.

It’s the Italian bond auction that’s attracting immediate gaze this morning, and it is another opportunity for traders to gauge how much confidence the market has in Italian debt. There is every likelihood that demand will be high for the bonds themselves, though the premium being paid is also likely to be relatively high, confirming the escalation in investors’ concerns regarding Italy being dragged into the sovereign debt crisis.

The FTSE 100 opened lower by 1%, before finding support near the 5800 level where the UK Index made a recovery to trade back towards flat territory after the first hour of trading. Much of this recovery was led by higher buyer demand in UK banks such as Barclays, RBS and Lloyds. THE FTSE 350 banking sector recovered from earlier losses on the session of 0.8% to trade higher by 0.6% by 9am (London time).

Shares in Credit Suisse fell over 1% after the Swiss bank reported a poor second quarter performance in fixed income trading. Net profits fell well below analyst expectations of 1 billion Swiss Francs, coming in at CHF768 million, with revenues from fixed income sales down by a very poor 76%, worse than some of the bank’s international peers.

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