London, England -- (SBWIRE) --05/12/2011 -- “Risk aversion continued on Monday as investors continuing to shy away from riskier asset classes such as mining and banking stocks whilst the typical safe haven investments such as the US dollar and Gold gained ground.

Greece debt rating cut by S&P

Fears over sovereign debt resurfaced over the weekend with speculation that Greece may require a second bailout and was even contemplating an exit from the Euro. These murmurs were quashed by Euro zone representatives but a downgrade of Greece’s debt rating by Standard and Poor could not have been timed any worse in the midst of these market rumours. The ratings agency downgraded Greece’s long term credit rating to B from BB- stating that there is increased risk the country may have to restructure its debt.

There remains enough near term fragility in the market to convince investors not to jump full flight back into riskier asset classes. Today’s numbers from HSBC were slightly concerning regarding the jump in costs the bank has endured. Alligned with this was news that, alongside Barclays, the two banks were setting aside a combined $2bn to cover liabilities when they mis- sold payment protection insurance. This tows a similar theme and large cash provision announced by Lloyds Banking Group last week.

Gains in the prices of commodities, including a 2.5% rise in crude oil and a 1% rise in Copper, has not been enough to entice investors to come back in and buy up shares of some of the miners and oil firms that were badly hit last week when commodity prices slumped severely. Gains in the price of the US Dollar, where the Dollar Index hit a new three week high, has kept investors weary.

The FTSE 100 saw losses of around 0.8% going into the market close but remains firmly locked into its 250 point trading range for the year. Near term support can be found around the 5860 level whilst investors are awaiting a break out above the 5105 level to convince that the UK Index could see more gains.”

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