Financial markets tread water amid uncertainty

Milan's major market closes lower, spread widens slightly

Financial markets tread water amid uncertainty

Milan, November 12 - Financial markets were treading water on Monday, taking small losses amid uncertainty over the future of Greece and the fiscal cliff looming ahead of legislators in the United States. Greece approved a 2013 austerity budget, and a spokesman for European finance ministers said Monday that lenders have prepared a "positive" report on the country. By meeting international requirements, the Greek government has likely cleared the way for a 31.5-billion-euro tranche of aid. But despite that good news, markets remained edgy. Many traders worry about the so-called "fiscal cliff" in the US - government-spending cuts and tax increases that are scheduled to kick in at the beginning of 2013, unless a divided congress and the White House can work out a compromise before then. Italian markets were also unnerved by violent protests against Italy's unemployment levels Monday in Naples, outside a meeting between Italian Labour Minister Elsa Fornero and her German counterpart. On Milan's stock exchange, the FTSE Mib ended the trading day down 0.39% at 15,121 points. Reflecting the overall unease, the spread between Italy's benchmark 10-year bond and the German Bund closed slightly higher at 368 basis points, up from 362 points on Friday. The yield on Italy's 10-year bond stood at 5.02%. The spread between Italian and German paper gives an indication of how investors view the prospects for Italy's economy. In London, the FTSE 100 index of top companies finished the day as it started - flat at 5,767.27 points. It was a similar story in Frankfurt, where the DAX index was also unchanged, at 7,168.76 points. In Paris, the Cac 40 index shed 0.35% to close at 3,411.65 points, while in Madrid the Ibex index fell by 0.90% to 7,567.80 points.

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