LONDON (AP) — Financial markets were largely steady in holiday-thinned trading Monday though concerns remain over the progress of U.S. budget discussions and the future of the economic reform program in Italy. For weeks, the discussions between the White House and Congress over a budget deal have been the main driver in markets. If a deal isn't agreed to by the start of 2013, automatic spending cuts and tax increases worth hundreds of billions of dollars will be imposed — which many economists think could push the U.S. economy back into recession. The prevailing view has been that a deal would be agreed to in time but as the deadline nears there are growing doubts over whether the U.S. will be able to avoid the so-called "fiscal cliff." "The reality is given that the U.S. government is now closed for the holiday break the likelihood of anything other than soothing procrastination is highly unlikely much before the Jan. 1 deadline," said Michael Hewson, senior market analyst at CMC Markets. Most markets across Europe were only open for half a day and will only re-open again on Thursday. German markets, and others, were closed for Christmas Eve. Among those that were open, Britain's FTSE 100 index of leading British shares closed up 0.2 percent at 5,954.18 while the CAC-40 in France was down an equivalent rate at 3,652.61. Wall Street was poised for falls at the open in what will also be a holiday-shortened trading day — both Dow futures and the broader S&P 500 futures were down 0.3 percent. Doubts over the progress of discussions prompted a fairly sizeable sell-off last Friday though many analysts still think there will be agreement on some sort of short-term measures. "Even if this stopgap measure is implemented it may not be enough to prevent unwanted volatility in equity markets going into 2013 as investors try and assess the adverse impact on the U.S. economy," said Neil MacKinnon, global macro strategist at VTB Capital. Continued... |