Europe

The eurozone faces a "mild" recession in the first half of next year, restricting full-year economic growth in the region to just 0.1%, according to Ernst & Young.

The FTSE 100 was trading 1.8% lower at 3pm as US markets slipped at the open following a poor Italian debt auction and signs of division re-emerging among eurozone leaders.

VIDEO

London's leading share index has made a subdued opening in early trading, with investors returning cautiously to stocks after yesterday's sell-off.

Gilt yields hit a new record low by mid-afternoon as investors continued to buy up UK debt amid concerns the European Union has not done enough to avert a financial meltdown.

DEBT CRISIS BLOG

ON NORTH AMERICA

ON BONDS

ON ASSET ALLOCATION

Actions taken by the European Central Bank this week, combined with the EU's efforts to sign a new treaty, have made it too risky to be underweight bank bonds in Europe, Kames Capital's fixed income team has said.