The FTSE 100 opened 0.5% down as banks fell on news Qatar's sovereign wealth fund had sold stock in Barclays.
Meanwhile, the FTSE Eurofirst 300 opened flat as strong commodity prices offset weak performance from the banks, with Credit Suisse and HSBC falling between 0.8% and 5%.
Both the Dow Jones and S&P 500 rose on Monday, reaching 12-month highs on good third-quarter earnings announcements; Apple's share price gained 7.0% after its third quarter earnings were significantly better than expected.
Market snapshots (at 13:01):
FTSE All-Share: +0.06%
FTSE 100: +0.09%
FTSE 250: -0.07%
Previous working day closing figures:
Dow Jones: 10,092.19
FTSE All-Share: 2,715.26
FTSE 100: 5,281.54
FTSE 250: 9,546.64
Thoughts (with Henderson New Star)
Gordon Brown recently detailed the Government's plan to sell £16bn of public assets to help tackle the country's budget deficit, set to hit a record £220bn this year, rather than hinder the economy's recovery by filling the void entirely through Government expenditure cuts.
Poised for sale are the Dartford Crossing, Student Loan book, Tote, the Channel Tunnel and its 33% stake in Urenco, the uranium enrichment company, from which the Government is targeting a total of £3bn in revenue over the next two years.
It expects the majority of sales to come from the voluntary disposal of assets by local government and councils, selling off business parks, offices and housing, amounting to £11bn, with the remainder from the sale of Whitehall property.
In the current economic climate, many argue this is a poorly timed manoeuvre. Asking councils to sell their property when the price of commercial real estate has halved and demand is low, begs the question as to whether it is likely that councils will conform to the government's plans. In addition, uncertainty around betting taxation and regulation, combined with increasing online competition, means that any potential investors will drive a hard bargain for Tote.
It seems the Government believes, in contrast to the less palatable alternatives of controlling public spending or increasing taxation, this proposal will reduce the budget deficit while still supporting economic growth.
It is, however doubtful, with the greater part of the revenue intended through the sale of council property, that reasonable prices will be attained from the sale of these suggested assets given the present economic climate. Finally, the success or otherwise of these proposals is almost irrelevant given that the proposed £16bn will barely scratch the surface of the £220bn deficit. So is this, rather, a token gesture to appease a discontented electorate, and an attempt to jettison some of its less appealing assets?
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