FTSE falls after US growth downgrade

Investors were spooked by a sharp downgrade of the US, where growth is now forecast to come in at a maximum of 2.4% this year, down from a previous estimate of 2.9% made in April.

In reaction markets moved lower, with the FTSE 100 down 0.5% or 25 points by mid-morning, at 5,596.

Other markets across Europe were also lower as investors fretted over the strength of the US recovery.

Both the German Dax and French Cac were lower, off 0.5% and 0.4% respectively, trading at 6,360 and 3,113.

However, markets could well pick up if there is more stimulus from the Fed.

Last night it opted to extend its Twist scheme by $267bn, rather than launch QE3.

The move has disappointed investors, although comments from Bernanke around the weakness in the US economy suggest he is ready to launch a more aggressive policy if needs be.

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• Topics
• Economics / Markets
• FTSE 100