UK

SMALL CAPS

The FTSE 100 opened lower this morning despite recent positive economic data, as rumours of a Fitch downgrade of Italy weighed on markets.

Fears we are facing a period of prolonged inflation are "unfounded", said Monetary Policy Committee (MPC) member Adam Posen, speaking on a day when UK inflation dropped sharply.

The Bank of England has proposed setting up an internal oversight committee to monitor and assess the processes employed in making financial stability policy decisions.

Bank of England governor Mervyn King has urged investors and public authorities to pay less attention to ratings agencies, which he said have often "rushed" to downgrade.

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Lazard Asset Management has launched a low volatility, quant-based equity fund.

Arch Financial Products is being sued for £150m by the board of 18 Guernsey-listed investment vehicles for failing to exercise fundamental care of assets and to account for "substantial secret profits", according to reports.

The Prime Minister David Cameron has rejected calls from an MP for an independent inquiry into the Arch cru investment funds scandal.