Europe bounces back after US deficit plan blow

UK and European stock markets have recovered some of yesterday’s losses after news the US has failed to agree a debt reduction plan sent global markets into the red.

The FTSE 100 opened roughly 0.58% or 30 points higher to reach 5,253, while the Germany's Dax edged up 0.67% or 37 points to reach 5,643 and France's Cac 40 edged up 0.77% to 2,917.

News that a US congressional committee tasked with reducing its $1.5trn deficit by $1.2tn (£726m) had failed to reach agreement was confirmed overnight.

Yesterday markets fell as news of the failed agreement spread across the globe.

Overnight the main Asian stock markets, including Japan's Nikkei 225 and Hong Kong's Hang Seng, dropped about 1%, while US markets saw heavier falls, with the Dow Jones losing 250 points to trade at 11,547.

The outcome triggers automatic cuts that will target the defence and domestic budgets over the next ten years, although Social Security and Medicaid will be protected.

US President Barack Obama blamed the Republicans on the committee for the failure, who he said refused to listen to the voices of reason and compromise, the BBC reports.

US futures are signalling a potential recovery on Wall Street today, with S&P 500 futures up 0.49% and Dow Jones futures up 0.21%.

Meanwhile the price of Brent Crude oil gained 0.7% to reach $107.6 per barrel, while the price of gold slipped down 1% to reach $1,702 per ounce.