US markets managed to push slightly higher this afternoon but the overall atmosphere remained cautious, as the news from Europe continued to be bleak.
Optimists are hoping that the weekend's election in Spain will be a cause for gains next week, but the change in government alters little for the beleaguered Eurozone.
By 3.45pm (London time), the Dow Jones had risen 0.43% to 11,821.77, while the S&P 500 was up 0.24% at 1219.01. In London, the FTSE 100 managed to erase some of its losses, but was still down 0.9% at 5372.60.
ECB head speaks out
Mario Draghi, the still-new Italian head of the European Central Bank, and the man dubbed 'Super Mario' for his cut in rates just hours after assuming office, has gone on the offensive. He has spoken out against those calling for the ECB to fire its 'big bazooka' and solve the Eurozone debt crisis.
Mr Draghi declared that robust economic governance was needed to maintain financial stability, simultaneously firing a shot across the bows of the EU itself as he demanded to know when the Eurozone rescue fund, the EFSF, would be deployed.
The ECB has been caught in the crossfire this week between Berlin and Paris, as the European heavyweights clash over whether the ECB should take a more active role.
Mr Draghi warned that an active programme of bond buying would undermine the credibility of the bank, a credibility that had taken years to construct.
Instead, it would focus on controlling inflation, echoing the comments his successor made about maintaining price stability.
The one real positive thing to emerge from his comments was an observation that the ECB was aware of the funding difficulties faced by banks, raising hopes that the ECB might lower collateral requirements for obtaining funding liquidity from the central bank.
Spanish voters prepare to have their say
Meanwhile, the Eurozone readies itself for the third change of government in as many weeks as Spain goes to the polls. At least this time it is a democratic operation.
Sunday's election is likely to see the current Socialist party replaced by the right-of-centre Popular Party (PP), with the PP's leader, Mariano Rajoy, promising to reduce spending in all areas apart from pensions.
Mr Rajoy has not provided details on his plans, perhaps because he knows austerity measures are likely to be highly unpopular with voters.
Should he win the elections, he will need to move quickly to reassure markets that his government is serious about cutting spending.
In Italy this week, bond yields rose rapidly despite the installation of a technocratic government, and any bond market 'honeymoon' for a new Spanish administration is likely to be just as brief.
Chemring sees difficult times ahead
Defence firm Chemring, which manufactures non-lethal items such as decoys and flares, dived 14% to 412.7p after it warned that revenues for the full year would be below expectations.
Delays in customer orders would cause revenues to be 5% lower than forecast, although revenue will still be 25% higher than last year, at £745 million.
Chemring said that its expectations of a difficult year in 2012 remained unchanged, with greater market uncertainty likely, along with continued delays in new orders.
Silver's sharp decline explained
Silver futures have managed to push higher today, but this is just a small recovery from yesterday's heavy losses.
The reason for the big drop yesterday was that the Shanghai Gold Exchange has decided to increase trading margins on silver contracts, forcing some investors to sell out of their holdings to avoid exceeding their margin limits.
These margin increases have become more regular this year, especially in the late spring, when silver's meteoric rise was stopped in its tracks by a series of such moves.
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'Chemring Spreads Drop on Lowered Revenue Expectations', Article by IG Index, last update: 18-Nov-11
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