Investors wait on US budget news


The FTSE 100 was down 11 points at 6051.3 by mid-afternoon

World markets have been mixed as investors nervously wait for the White House’s budget proposal for 2012 and weigh up the latest developments in the eurozone.

Wall Street’s Dow Jones Industrial Average fell 0.1%, as US President Barack Obama prepared to unveil a 3.73 trillion US dollar (£2.3 trillion) budget that includes a five-year freeze on many domestic spending programmes.

Back in London, the FTSE 100 Index was down 11 points at 6051.3 by mid-afternoon on Monday, as data revealed a decline in Portugal’s gross domestic product and fears emerged over the possible break up of a German bank.

But elsewhere the Nasdaq Composite Index in the US is ahead, as is Germany’s DAX. In France, the CAC-40 dropped.

Investor confidence has been shaken by the White House’s projected deficit – expecting it to spike to 1.65 trillion US dollars (£1 trillion) in the current fiscal year.

In the UK, bankers have been weighed down by growing speculation that German lender WestLB could be facing a break up as it prepares to meet a European Commission deadline for restructuring on Tuesday and by a report revealing 0.3% decline in Portugal’s GDP in the final quarter of 2010.

Lloyds is down 1.1p at 65.7p, Barclays is down 0.9p at 310.2p and HSBC is 6.3p alower t 707.7p.

Engineering stocks enjoyed a good session after oil and services support firm Wood Group announced it had sold its well support arm, which makes electric submersible pumps used to maximise oil production, to General Electric (GE) for 2.8 billion US dollars (£1.75 billion).

The Wood deal prompted gains of more than 3% for engineering firms Weir Group and Invensys, which are up 68p at 1763p and 10.1p at 351p respectively, and topped the Footsie risers board.

Meanwhile, Aberdeen-based Wood surged nearly 13% on the FTSE 250 Index, up 78p at 650.5p, after announcing its deal with GE, which will see at least £1 billion of the proceeds go to shareholders.

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