The FTSE closes up but off highs

After such a solid start to the day the FTSE 100 has rather disappointed with its final performance, and has drifted lower for most of the day.

Confidence was very high ahead of the open after most of Europe’s traders and investors interpreted  last night's FOMC minutes in the same way.

Federal Reserve chairman Ben Bernanke has reaffirmed hopes that US unemployment levels would need to be around 6.5% before a reduction of the current QE process could start. He also said that the current unemployment level of 7.6% was somewhat overstated. When we consider how long it has taken for the US to get these levels down from 8%, it could well be some considerable time before they find themselves in the right ballpark.

The FOMC meeting showed there is an equal split between the 19 members, with one half wanting cuts to start this year and the half looking at next year.

Another issue which did not get quite as much air time was the requirement for inflation to reach 2%, especially as it is currently languishing around 1%.

European traders are also keeping a close eye on the way that Portugal’s sovereign debt is behaving, as it is once again looking ominously like it will make a fresh charge for higher levels. To date it has not dragged others with it but that must certainly be a fear for the European Central Bank.

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