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MARKET PREVIEW: FTSE 100 to extend losses, US debt talks eyed

Published: 07:00 28 Jul 2011 BST

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Stocks in the UK are expected to extend yesterday’s losses today as there is still no progress in US debt negotiations with just five days left until the 2 August deadline to raise the debt ceiling.

“While the market is starting to realise that a downgrade to the US credit rating is becoming more likely, it still fails to believe that the US could actually default. Nonetheless, as the deadline looms larger, there are plenty of participants with the ‘what if’ scenario firmly in the back of their minds,” said research analyst at IG Markets Ben Potter.

In addition to that, yesterday’s US data was bearish. The Fed’s Beige Book report on regional economic conditions showed that growth in business activity across the country slowed in June.

The FTSE 100 is expected to open at 5,803 today, 53 (0.9 percent) below yesterday’s close. The blue chip index dropped 73 points (1.25 percent) on Wednesday.

Traders will have plenty of US data and UK corporate reports to digest today, including interim results from AstraZeneca (LON:AZN), Royal Dutch Shell (LON:RDSB), Centrica (LON:CNA) and BAE Systems (LON:BA).

Today's macroeconomic reports will include Thursday’s weekly jobless claims report from the US Labor Department, Bloomberg’s consumer confidence survey and an update on pending home sales from the National Association of Realtors.

US stocks fell sharply yesterday.

The Dow Jones Industrial Average slipped 199 points (1.6 percent) to close at 12,302, while the broader S&P 500 index shed 27 points (2.05 percent) to end the session at 1,304.

Asian stocks moved in the same direction as US equities.

Japan’s benchmark Nikkei 225 index was 158 points (1.55 percent) down at 9,889 just before close of play, while China’s Shanghai Composite Index shed 28 points (1 percent) to 2,695 by the end of the session.

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