FTSE hangs onto 6600 level

The early session across Europe has seen most of the indices drift lower.

If I asked traders yesterday lunchtime ‘What is the biggest upcoming development in the US?’, I would imagine that 99% would have anticipated issues surrounding the Federal Reserve, Ben Bernanke or quantitative easing; it is highly unlikely that one of the US states going bust would have been on anyone’s radar. This news will now be worrying many traders, however, and opening up the question as to how many other US states are in trouble.

In the UK, Vodafone has got off to a very stable start following Verizon Wireless’s report last night and its own figures this morning. Over the last couple of years Vodafone’s 45% stake in the US telecommunications company has proven invaluable, as the dividend it has received has made the difference between a loss-making year and a profitable one. Vodafone is still the second largest company in the FTSE with a weighting of 5.65%, and therefore capable of giving the index a solid nudge as to which direction it will take.

Having taken so long to break through the 6600 level, it will be interesting to see how long the FTSE can hold onto this ground. Once again, actions in the US could go a long way to dictating the markets' behaviour.

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