Markets stutter as investors remain cautious on global economy

Markets bounced off yesterday's lows this morning, but as the first six months of the year draw to a close investors remain nervous about the prospects for the global economy.

The FTSE and other European markets have ticked higher in opening deals after yesterday’s sell-off.

On Wall Street, the DJIA closed 268 points lower at 9870. The Nikkei lost another 1.96% as recent data has added to worries about its outlook.

The UK index was up 21 points or 0.4% at 4935.91 but remained firmly below 5,000 - having fallen 157 points yesterday.

The index is down just over 10% from where it started the year as economic news here and abroad and steps to begin fiscal tightening have added to worries about the outlook for domestic firms.

Today's Nationwide report points again to only a muted recovery in house prices. The survey shows prices rose only 0.1% month in June, far lower than the 0.5% increase in May and 1.1% rise in April.

Events in Europe including today's inflation data are likely to dominate attention in morning trade.

France's CAC is 0.15% higher at 3438 and Germany's Dax is up 0.22% at 5965.

Banks were out of favour yesterday with the European banking sector falling 6.1% as investors fretted about the European Central Bank’s decision to push ahead with its demand for repayment of 442 billion euros of loans paid out a year ago. The money falls due on Thursday.

With sovereign debt still a worry and signs of economic slowdown in Asia and the US, banks remain reluctant to lend to one another. That has added to worries about whether European banks have access to enough cash to pay their bills.