FTSE 100

US shares plunged at opening ahead of an expected announcement politicians have failed to agree a deal to cut the US' sprawling budget deficit.

Global markets were spooked by Spanish bond yields spiking to near-critical levels, with many indices posting losses of more than 1% overnight, and the FTSE 100 opening 1% lower this morning.

Schroders' Richard Buxton has warned investors the chances of the FTSE 100 breaking through the 6,000 level within the next 12 to 18 months is remote.

US and European markets rallied late Friday as Italian policymakers approved new austerity measures, a move which should help pave the way for a new government.

Markets across Europe recovered from early losses on Thursday despite a new warning from the EU Commission that the eurozone may fall into recession next year.

The FTSE 100 dropped sharply mid-morning as investors fretted over the future of Italy following a spike in the country's bond yields to record levels.

London and European stock markets edged up as the G20 talks in Cannes continued on Friday, with Royal Bank of Scotland boosting the UK after climbing 5% on its profits update.

Both the German Dax and the French Cac 40 are rallying on hopes Greece is more likely to accept the debt deal, and as the ECB takes action to tackle the crisis.

Banking shares plunged this morning, leading markets lower, following news Greek prime minster George Papandreou has called a referendum over last week's eurozone rescue deal.

Markets opened lower today as investors paused for breath following last week's Europe-led rally.